Brocklehurst & Potter Co. v. Marsch

• Decision Date: 14 September 1916
• Parties: BROCKLEHURST & POTTER CO. v. MARSCH. READ et al. v. SAME. McLEAN v. SAME.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

225 Mass. 3

113 N.E. 646

BROCKLEHURST & POTTER CO.

v.MARSCH.

READ et al.

v.SAME.

McLEAN

v.SAME.

Supreme Judicial Court of Massachusetts, Worcester.

Sept. 14, 1916.

Report from Superior Court, Worcester County; John D. McLaughlin, Judge.

Three actions at law, by the Brocklehurst & Potter Company, by A. C. Read and others, and by William McLean, against John Marsch, reported by a judge of the superior court for the determination of the correctness of his orders overruling defendant's demurrers to the several declarations. In accordance with the terms of the report, demurrer in the Brocklehurst & Potter Company case and in the Read case overruled as to the first and second counts, and defendant required to answer as to such counts, and demurrer to third count sustained; and in the McLean case, demurrer sustained as to the first and third counts, and overruled to a second count, as to which the defendant must answer, and judgment to be entered for the defendant as to the counts to which the demurrer is sustained, unless amendment to the declaration is allowed by the superior court.

C. G. Metzler and H. N. Longley, both of Boston, for plaintiffs.

Whipple, Sears & Ogden, of Boston, for defendant.

RUGG, C. J.

These are three actions at law which have been reported by a judge of the superior court for determination as to correctness of his orders overruling the defendants' demurrers to the several declarations. The action by the Brocklehurst & Potter Company will be considered first. The declaration is in three counts, the first in tort, and the second and third in contract.

The first count sets out, in substance, that the defendant was a general contractor for the construction of a portion of the lines of the Southern New England Railroad and that the plaintiff had a subcontract with him for the doing of some of this construction; that the railroad corporation, in violation of its contract with the defendant, stopped all work upon his contract and thereupon the plaintiff and defendant entered into a written contract under date of February 22, 1913, for the adjustment of their respective rights and obligations towards each other growing out of the enforced suspension of all work by the defendant and his subcontractor due to the action of the railroad corporation. The essential features of this contract were a release by the plaintiff of all liability to it on the part of the defendant on account of work done by it on the railroad, with an obligation by the defendant to present to the railroad corporation all claims for damages to the plaintiff and all damages of his own and to collect and adjust the same, the defendant being given full authority in the premises both to settle and to sue for the plaintiff. Then followed this agreement:

‘And in the event that settlement is made by said [railroad] corporation with said Marsch, the said Marsch shall pay to said company [the plaintiff] pro rata share of the amount recovered, taking into consideration in said pro rata distribution all things relating to the work performed, including plant, general outfit, etc.; and in case said company [the plaintiff] and said Marsch are unable to agree upon said pro rata distribution, then, and in that event, the distribution shall be made by three arbitrators whose decision, it is hereby agreed, shall be final. Said board of arbitration shall be composed of said Marsch and two disinterested members who have a practical knowledge of such work as has been performed; said arbitrators to be appointed, one by a committee of two representing all the subcontractors on said construction work, and the third to be appointed by said Marsch and the arbitrator appointed by the parties interested.’

Further allegations are that the defendants settled all claims with the railroad corporation and by fraud represented to the plaintiff that the net amount received by him was less than it was in truth, and that his expenses incurred in connection with the settlement were greater than they were in fact, whereby the plaintiff was induced to and did execute a release to the defendant in return for the payment of a sum much less than its pro rata share provided for in the agreement and that by reason of these false and fraudulent representations, the plaintiff has been damaged.

The second count sets out substantially the same allegations of facts and concludes that:

‘The defendant has made a breach of his contract, all to the great damage of the plaintiff.’

The third count is for money had and received by the defendant to the plaintiff's use. All counts are alleged to be for one and the same cause of action.

The joinder of these several counts in one action was permissible under R. L. c. 173, § 6, Sixth. Crafts v. Belden, 99 Mass. 535;Morse v. Hutchins, 102 Mass. 439;Whiteside v. Brawley, 152 Mass. 133, 24 N. E. 1088;Brown v. Sallinger, 214 Mass. 245, 101 N. E. 382.

The allegations of fraud and misrepresentations of fact in obtaining the release of all claims and demands against the defendant, dated September 11, 1913, as set out at length in count 2, doubtless were not necessary to a statement of the substantive facts out of which the plaintiff's claim arose. It may be assumed that these allegations were made in anticipation of and in answer to an expected defense of a release under seal. Although not obnoxious to a demurrer, the pleading in an action at law of an apprehended defense is not to be commended. Stephen on Pleading (Williston's Ed.) 422, and cases cited.

It becomes necessary to determine the nature of the contract of February 22, 1913. Its purpose was to provide a method for the adjustment of the claim for damages which the plaintiff had against the defendant by reason of being prevented from carrying forward to completion its subcontract for construction work upon the railroad. A part of its consideration was the execution and delivery by the plaintiff of a release under seal of all its claims for damages against the defendant for that cause of action. In substitution for all such claims, there is a promise by the defendant to present seasonably all his claims and all claims of the plaintiff against the raidroad corporation and in case of a settlement of these claims he further promises to pay to the plaintiff a ‘pro rata share of the amount recovered, taking into consideration in said pro rata distribution all things relating to the work performed including plant, general outfit,’ etc. That promise is direct, plain and unequivocal. It is not made to depend upon any other act, event or conduct. It is disconnected from any other consideration. It is separated both in form of grammatical structure and in the substance of the subject-matter from the arbitration clause. The amount of money which thus it was stipulated should be paid to the plaintiff by the defendant is as easy of ascertainment by the usual methods of court trial as are damages in many cases. The sum of money actually received by the defendant must be provable without difficulty. His expenses and disbursements stand on the same footing. On the averments of the declaration ‘steam shovel units or their equivalents' were adopted by the parties as the correct basis for distribution. But even if this be not so, there appears to be no insurmountable obstacle in assessing damages. No greater difficulties exist than often are encountered by courts and juries. Maynard v. Royal Worcester Corset Co., 200 Mass. 1, 8, 85 N. E. 877;C. W. Hunt Co. v. Boston Elev. Ry., 199 Mass. 220, 236, 85 N. E. 446;Stevens v. Rockport Granite Co., 216 Mass. 486, 493, 104 N. E. 371, Ann. Cas. 1915B, 1054.

[4][5] The stipulation as to arbitration is not made a condition precedent to a right to recover upon the contract. It is distinct and severable from the agreement to pay a pro rata share of the amount received by the defendant. The phrase of the contract in this respect is markedly different, for example, from that of the standard form of insurance. St. 1907, c. 576, § 59 (page 886). Second Society of Universalists v. Royal Ins. Co., 221 Mass. 518, 525, 526, 109 N. E. 384. It is in legal effect like those found in Reed v. Washington Insurance Co., 138 Mass. 572,Norcross Bros. v. Vose, 199 Mass. 81, 94, 85 N. E. 468, and Derby Desk Co. v. Conners Bros. Const. Co., 204 Mass. 461, 467, 90 N. E. 543. See Hanley v. Etna Ins. Co., 215 Mass. 425, 429, 102 N. E. 641, Ann. Cas. 1914D, 53.

The contract in this respect is plainly distinguishable from those before the court in Hood v. Hartshorn, 100 Mass. 117, 1 Am. Rep. 89, and Old Colony St. Ry. v. Brockton & Plymouth St. Ry., 218 Mass. 84, 105 N. E. 866.

This construction is reinforced by the consideration that there is doubt about the validity of any arbitration clause which would constitute one party to a dispute a member of a board of arbitration to pass upon his own claims. Arbitration implies the exercise of the judicial function. An arbitrator ought to be free from prejudice and able to maintain a fair attitude of mind toward the subject of controversy. It would be a travesty upon all ideas of judicial propriety or of judicial work for a man to be an arbitrator to settle the amount of his own liability. It is contrary to natural right and fundamental principles of the common law for one to judge his own cause. Pearce v. Atwood, 13 Mass. 324;Strong v. Strong, 9 Cush. 560, 570;McGregor v. Crane, 98 Mass. 530. See in this connection Hickman v. Roberts, [1913] A. C. 229. Bristol Corp. v. Aird, [1913] A. C. 241, 247, 248, 254, 255. There is nothing in Fox v. Hazelton, 10 Pick. 275, which gives countenance to the contention that an agreement to submit a controversy to the decision of a party can be sustained.

[7] Without deciding this point, it is enough to say that it cannot be presumed that parties intended to make such an arbitration a condition precedent to a right of action without far more explicit words than are found in the agreement here...