Fernandes Grain Co. v. Hunter

• Decision Date: 14 July 1925
• Docket Number: No. 18675.,18675.
• Citation: 274 S.W. 901
• Parties: FERNANDES GRAIN CO. v. HUNTER et al.
• Court: Missouri Court of Appeals

274 S.W. 901

FERNANDES GRAIN CO. v. HUNTER et al.

No. 18675.

St. Louis Court of Appeals. Missouri.

July 14, 1925.

Appeal from St. Louis Circuit Court; Frank Landwehr, Judge.

Suit by the Fernandes Grain Company against Henry Hunter and another, a copartnership, trading as the Hunter Grain Company. Judgment for defendants, and plaintiff appeals. Affirmed.

John A. Nolan and Robert S. Harbison, both of St. Louis, for appellant.

W. W. Schiek and Lehmann & Lehmann, all of St. Louis, for respondents.

BENNICK, C.

This is a suit in equity, growing out of a controversy between the parties to this action, members of the Merchants' Exchange of St. Louis, resulting from the action of defendants in accounting for the sale of a carload of wheat to the country shipper, the Farmers' Grain Company of Bulpitt, Ill., instead of to the broker, the plaintiff herein. The matter in dispute was first submitted by an agreement in writing to the arbitration committee of the exchange, by whom an award was rendered in favor of plaintiff. In due time an appeal was taken by defendants, under the rules of the exchange, to the appeals committee, which committee, after a hearing, reversed the arbitration committee and made an award in favor of defendants. Thereupon plaintiff filed a bill in equity in the circuit court of the city of St. Louis, seeking to have the award set aside. The finding of the chancellor was for defendants, and a judgment was entered accordingly from which plaintiff has appealed to this court.

Plaintiff's bill sets out in great detail the facts relative to the hearings before both the arbitration committee and the appeals committee, and prays that the award of the latter be found null and void and of no force and effect, for the reasons that the committee of appeals (1) did mistake and exceed its powers, (2) was guilty of misconduct and misbehavior, (3) manifested partiality towards defendants and against plaintiff, and (4) made an award against plaintiff by undue means. The court was also asked to decree and adjudge that defendants account to plaintiff for the money received from the sale of the car of wheat.

The answer was a general denial, coupled with a plea in bar in which it was asserted that plaintiff had not complied with the laws of Missouri regulating foreign corporations, and therefore could not maintain an action in court. The reply was conventional.

Many of the facts in evidence were uncontradicted. It was undisputed that on September 6, 1921, the Farmers' Grain Company of Bulpitt, Ill., shipped a carload of wheat to themselves or order at St. Louis, with a notation on the bill of lading, "notify Fernandes Grain Company at St. Louis"; that the bill of lading was indorsed by them or said date, and attached to a sight draft for $1,400, drawn on the Fernandes Grain Company at Springfield, Ill.; that the sigh draft with bill of lading attached was pre rented to and paid by the Fernandes Grab. Company on September 8, 1921; that sail company thereupon forwarded the bill of lading, properly indorsed, to the Von Rump Grain Company of St. Louis, with instructions to deliver the same to defendants the Hunter Grain Company; and that on September 12, 1921, the delivery was made. Defendants sold the wheat for the sum of $1,720.44 and made the return therefor to the country shipper, the Farmers' Grain Company.

The evidence on the part of plaintiff was that Mr. Oliver H. Schwartz, an employee of the Von Rump Grain Company, gave defendants the bill of lading and instructed them to sell the wheat for the account of plaintiff. The evidence of defendants was that they were instructed by Schwartz to sell and make returns direct to the country shipper.

After considerable correspondence between plaintiff and defendants relative to the disposition of the proceeds of the car, plaintiff finally made a formal demand upon defendants for an accounting, which they refused to make.

On January 3, 1922, plaintiff made complaint against defendants to the board of directors of the Merchants' Exchange, by whom the matter was referred to the regular arbitration committee of the exchange, and the parties directed to enter into a written agreement of submission to arbitration. After a hearing, the arbitration committee rendered an award in favor of plaintiff and against defendants in the sum of $1,589.81.

Mr. Eugene Smith, secretary of the Merchants' Exchange, testified that he was ex officio secretary of the various committees, and identified the records of the several meetings of the committees which were introduced in evidence. His records were only a brief resumé of what transpired, showing all persons present, either as members of the committees, litigants, witnesses, or stenographers, together with notations of all objections made by either party.

The secretary's records showed that plaintiff was represented before the arbitration committee by Mr. Sim Fernandes, its president, and defendants per se. Messrs. H. A. Von Rump, Oliver Schwartz, Adolph Schuessler, a stenographer in the employ of the Hunter Grain Company, and Clyde McClintock, a former manager of the Farmers' Grain Company, were present as witnesses. Mr. H. J. Ready, stenographer for defendants, and Mrs. Simmons, for plaintiff, were present to record the testimony. The rules of the exchange provided that either party, to a case might provide a shorthand reporter at its own expense.

Under the rules of the exchange, and in due course, defendants appealed from the adverse holding of the arbitration committee to the appeals committee of the exchange. This committee was composed of 12 members, 7 of whom constituted a quorum.

The appeals committee met May 11, 1922, and after a hearing 5 of the 8 members present made a finding in favor of defendants, and the remaining 3 signed a minority report in plaintiff's favor. Plaintiff thereupon requested a new trial, and a hearing on this request was set by the appeals committee for June 1, 1922. At that time Mr. Sim Fernandes appeared before the committee and requested that plaintiff be allowed to be represented by counsel. Defendants objected and were sustained. The committee then adjourned over until June 15th in order to give counsel for plaintiff and counsel for the exchange an opportunity to consider this request further. On June 15th Mr. Fernandes again appeared before the committee and filed a prepared statement attacking the procedure had before the appeals committee, and declined to proceed further. Thereupon plaintiff's application for a rehearing was dismissed.

Many of the minor details of what transpired before these various committees will be set out later in this opinion as they may bear upon the several points for decision.

Appellant's assignment of errors covers two points: (1) That the circuit court erred in dismissing plaintiff's bill because such judgment was contrary to the greater weight of the evidence and contrary to the law applicable to the evidence (2) that the circuit court erred in not decreeing the award of the committee of appeals void and rendering judgment for the appellant.

Inasmuch as the second point assigned as error was not called to the attention of the lower court in the motion for new trial, the first point remains as the only matter before this court for decision.

The courts have always been disposed to encourage the settlement of controversies by arbitration, and regard the proceedings in such cases with favor, and construe them with liberality, on the theory that justice may on occasions be promoted by the submission of a dispute to a domestic tribunal created by the parties themselves which, not being bound by the rules of evidence, can consider facts that a court could not regard. Tucker v. Allen, 47 Mo. 488; Bennett's Adm'r v. Russell's Adm'x, 34 Mo. 524; State ex rel. v. Merchants' Exchange, 2 Mo. App. 96.

The party complaining of an award, as was done in this case, may petition a court of equity to set the award aside for fraud in the procurement thereof. Valle v. North Mo. R. Co., 37 Mo. 445. But it has been uniformly held that such court will not vacate the award merely because it is against the law and the evidence. To justify the setting aside of an award, fraud, corruption, partiality, or some misconduct of the arbitrators calculated to prejudice the rights of the parties must be shown; and in this connection the terms "fraud, corruption, partiality, and misconduct" imply a wrongful intent and not mere error of judgment on the part of the arbitrators. Newman v. Labeaume, 9 Mo. 30; Vaughn v. Graham, 11 Mo. 575; Bridgman v. Bridgman, 23 Mo. 272; Bennett's Adm'r v. Russell's Adm'x, 34 Mo. 524; Hyeronimus v. Allison, 52 Mg. 102; Mitchell v. Curran, 1 Mo. App. 453; State ex ml. v. Merchants' Exchange, 2 Mo. App. 96; Thatcher Imp. & Merc. Co. v. Brubaker, 193 Mo. App. 627, 187 S. W. 117.

This being a suit in equity, it must in effect be tried de novo in this court, necessitating a careful review of all the evidence. Keener v. Williams (Mo. Sup.) 271 S. W. 489; Walsh v. Walsh, 285 Mo. 181, 226 S. W. 236; Ford v. Laughlin, 285 Mo. 533, 226 S. W. 911; Gibson v. Shull, 251 Mo. 480, 158 S. W. 322.

Was there testimony to support the allegations in plaintiff's bill? Its contentions may be generally grouped under six headings and will be so considered herein.

Plaintiff" argues that the appeals committee, instead of hearing the case on the testimony taken by the arbitration committee, as recorded on the books of the exchange, tried the case de novo, examining orally the witnesses brought before them. The determination of this point hinges upon the interpretation to be placed upon section 2, rule 6, of the exchange, reading in part as follows:

"The awards of the committee of arbitration may be appealed from, and the case carried to the committee of appeals. * * * It shall be the duty of the committee of appeals to review such decisions of the committee of arbitration as may...