Franks v. Franks

• Decision Date: 06 April 1936
• Parties: FRANKS v. FRANKS et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

294 Mass. 262

1 N.E.2d 14

FRANKS v. FRANKS et al.

Supreme Judicial Court of Massachusetts, Essex.

April 6, 1936

Exceptions from Superior Court, Essex County; Williams, Judge.

Proceeding in the matter of the arbitrament between William Franks Samuel Franks and the Franks Brothers Company. To review a judgment of the superior court denying defendants' motion to reject final award, and sustaining plaintiff's motion to accept and confirm the final award, defendants bring exceptions and appeals.

Exceptions sustained. Appeal dismissed.

S. M. Salny, of Fitchburg, for Samuel Franks and others.

N Tobin, of Lynn, for William M. Franks.

QUA Justice.

This case involves the validity as a statutory arbitration under G.L.(Ter.Ed.) c. 251 of a submission by agreement between William M. Franks, hereinafter called the plaintiff, and Samuel Franks and Franks Bros. Company, hereinafter called the defendants, and of an award pursuant thereto. Upon the return of the final award to the Superior Court, a judge of that court denied the defendants' motion to reject it and allowed the plaintiff's motion to accept and confirm it.

It is well settled that where an arbitration has been had by agreement of the parties out of court and not under an agreement approved by the court in pending litigation (see Rule 92 of the Superior Court [1932]), the court has no power to wave aside all ordinary procedure and to render judgment upon the mere filing of the award unless the parties have acted in accordance with the statute. Compliance with the terms of the statute is a jurisdictional requirement. Abbott v. Dexter, 6 Cush. 108; Bent v. Erie Telegraph & Telephone Co., 144 Mass. 165, 10 N.E. 778; Nay v. Boston & Worcester Street Railway, 192 Mass 517, 521, 78 N.E. 547; Cochrane v. Forbes, 257 Mass. 135, 143, 153 N.E. 566. By those terms the subject matter of statutory arbitration is limited to ‘ Controversies which might be the subject of a personal action at law or of a suit in equity.’ G.L.(Ter.Ed.) c. 251, §§ 1, 14.

In this case the agreement for submission was in the form prescribed by section 2. The demand submitted was ‘ The determination and award of a fair sum of money * * * to be paid to William M. Franks by Samuel Franks and Franks Bros. Company for One Hundred (100) shares of the common stock of Franks Bros. Company this day sold and delivered by William M. Franks to Samuel Franks and Franks Bros. Company.’ If the facts were, as this submission on its face seems to imply, that before the agreement to arbitrate was entered into the plaintiff had completed a sale delivery of stock to the defendants on terms which obligated the defendants to pay a fair price for it, an issue as to price would be a controversy which might be the subject of a personal action, and so also a proper subject for statutory arbitration. But at the hearing on the motions the defendants filed an affidavit which, if true, would justify, if it did not require, findings of fact that when the agreement of submission was entered into, the stock had not been sold and delivered to the defendants, but that it had been placed in escrow by the plaintiff to be delivered to the defendants upon payment of such award as the arbitrator might make; that no obligation to pay for the stock would arise until after completion of the arbitration; and that in addition to the submission agreement in statutory form the parties at the same time executed a second instrument elaborately regulating the method of carrying out the proposed statutory arbitration, and providing, among other things, that from the amount awarded by the arbitrator certain deductions should be made, that the balance remaining should be paid partly in cash in thirty days from the date of the award and partly in instalments to be secured and paid in a manner to be determined by the arbitrator, that the arbitrator was to place separate values upon certain classes of assets of Franks Bros. Company, that there should be eliminated from the computation of the award the value so placed upon certain of these classes if, after notice of the award, those values were ‘ not acceptagle’ to the defendants, that thereafter the arbitrator should appoint a custodian for the sale of such classes of assets, the proceeds of sale to be divided between the parties, and that the arbitrator should determine the proportions in which certain taxes should be borne by the parties. In brief, the affidavit tended to show that the placing of the stock in escrow, the arbitration submission in statutory form and the second instrument were all parts of a single comprehensive agreement by which the plaintiff was to sell out to the defendants his interest in Franks Bros. Company, and that the purported statutory arbitration was not for the purpose of obtaining a decision of any existing controversy which might have been the subject of an action or suit, but was merely a means agreed upon for establishing certain basic valuation from which the price could later be ascertained and paid in accordance with the decision of the arbitrator under the second instrument. The fundamental character of the transaction was not altered by the recommittal to the arbitrator or by the further agreement of the parties authorizing him to revise and to redetermine certain of his original findings.

There is a clearly recognized distinction between the arbitration of a controversy and a contract one term of which calls for the ascertainment by designated persons of values quantities, losses or similar facts. Palmer v. Clark, 106 Mass. 373, 389. In Hanley v. AEtna Ins. Co., 215 Mass. 425, 102 N.E. 641, Ann.Cas.1914B, 53, the ordinary appraisal of fire losses by referees was held to belong to the latter class and not to the former. In Hubbell v. Bissell, 13 Gray, 298, a purported award was rejected on this ground.‘ An award, is the judgment of a tribunal selected by the parties to determine matters actually in variance between them-not merely to appraise and settle the price of property contracted for under the stipulation that...