In re Controversy Between Rexburg Investment Co.

• Decision Date: 30 December 1922
• Citation: 211 P. 552,36 Idaho 552
• Court: Idaho Supreme Court
• Parties: In the Matter of the Controversy Between the REXBURG INVESTMENT COMPANY, a Corporation, Appellant, and DAHLE & ECCLES CONSTRUCTION CO., a Corporation, Respondent

211 P. 552

36 Idaho 552

In the Matter of the Controversy Between the REXBURG INVESTMENT COMPANY, a Corporation, Appellant, and DAHLE & ECCLES CONSTRUCTION CO., a Corporation, Respondent

Supreme Court of Idaho

December 30, 1922

ARBITRATION-AWARD-ERROR BY ARBITRATORS-VACATING-EXPIRATION OF TIME LIMITED BY AGREEMENT-WAIVER-REFUSAL TO HEAR PERTINENT EVIDENCE.

1. The fact that an award is not made within the time limited by the agreement does not invalidate it, when the parties subsequently participated in a hearing by the board without objection on that ground.

2. Held, that the arbitrators committed prejudicial error by refusing to hear pertinent evidence, and that the award should be vacated.

APPEAL from the District Court of the Ninth Judicial District, for Madison County. Hon. James G. Gwinn, Judge.

Appeal from order denying motion to vacate award and from judgment. Reversed and remanded, with orders to vacate award.

Reversed and remanded. Costs awarded to appellant.

Frank L. Soule and Budge & Merrill, for Appellant.

Arbitrators were guilty of misconduct in refusing to hear pertinent evidence of Rexburg Investment Co. (C. S., sec. 7434; Canfield v. Watertown Fire Ins. Co., 55 Wis. 419, 42 Am. Rep. 704, 13 N.W. 252; Cohn v. Wemme, 47 Ore 146, 81 P. 981; Redner v. New York Fire Ins. Co., 92 Minn. 306, 99 N.W. 886; McDonald v. Lewis, 18 Wash 300, 51 P. 387; Roberts Bros. v. Consumers Can Co., 102 Md 362, 62 A. 585.)

Arbitrators committed gross error in hearing evidence of contractor in absence of arbitrator Zollinger. (C. S., sec. 7432; Heritage v. State, 43 Ind.App. 595, 88 N.E. 114; Kent v. French, 76 Iowa 187, 40 N.W. 713; Doherty v. Doherty, 148 Mass. 367, 19 N.E. 352; Cravens v. Estes, 144 Ky. 511, 139 S.W. 761.)

Arbitrators committed gross error in hearing evidence of contractor in absence of and without notice to representatives of investment company. (Curran v. City of Philadelphia, 264 Pa. 111, 107 A. 636; 5 C. J. 590.)

Award is void for the reason that same was not made within time limited by agreement of arbitration. (C. S., sec. 7430; Abrams v. Brennan, 2 Cal.App. 237, 84 P. 363; Ryan v. Dougherty, 30 Cal. 218; 3 Cyc. 631; Bent v. Erie Tel. & Tel. Co., 144 Mass. 165, 10 N.E. 778; Joshua Hendy Mach. Co. v. Gray, 9 Cal.App. 610, 99 P. 1110.)

Ray D. Thatcher and C. E. Crowley, for Respondent, file no brief.

MCCARTHY, J. Dunn and Lee, JJ., concur. Budge, J., disqualified.

OPINION

MCCARTHY, J.

This is an arbitration proceeding. In this opinion the Rexburg Investment Company, one of the parties, will be designated as the Investment Company, and the Dahle & Eccles Construction Company, the other party, as the Construction Company. By written agreement in 1917 the Investment Company employed the Construction Company to complete the construction of certain dwelling-houses in Rexburg, Idaho, and agreed to pay therefor the actual cost plus a compensation of 10 per cent. Upon the completion of the work a controversy arose between them, the Investment Company claiming that it had overpaid and the Construction Company claiming that there was a balance owing it. This controversy they submitted to three arbitrators by a written agreement in accordance with the provisions of C. S., secs. 7428 to 7437, being the chapter governing arbitrations. In the arbitration agreement it was stated that the Construction Company was under obligation to secure all possible rebates and discounts and account therefor to the Investment Company, and that the arbitrators should make their determination, so far as possible, from an inspection of the buildings, and from inquiry as to market prices of materials and labor at the date of construction, and should be allowed access to all papers and accounts in the possession of either party. The award, filed in the district court, found for the Construction Company and against the Investment Company in the sum of $ 3,313.15. The Investment Company made a motion to vacate the award of the arbitrators on several grounds, the principal being, first, that the award is void because not made within the time limited by the agreement, second, that the arbitrators were guilty of misconduct in refusing to hear pertinent evidence to the prejudice of the Construction Company, to wit, evidence as to the market price of materials and going wages of labor at the date of construction. The court denied the motion and entered judgment for the Construction Company on the award. From the order and judgment the Investment Company appeals.

The principal assignments of error, and the only ones which we will expressly notice, are based upon the two grounds of the motion above set forth. The arbitration agreement provided that the award should be made on or before July 15, 1919. The award was not made until October 3d. It is held that the fact an award is not made within the time limited by the agreement of arbitration invalidates it. (Joshua Hendy Mach. Works v. Gray, 9 Cal.App. 610, 99 P. 1110; Ryan v. Dougherty, 30 Cal. 218; Bent v. Erie Tel. & Tel. Co., 144 Mass. 165, 10 N.E. 778.) In the present case, however, the first meeting of the board was on September 22, 1919. The board sat for 11 days, and made its award October 3d. Hyrum Ricks, Jr., representative of the Investment Company, attended the session on September 22d and several sessions thereafter. While he objected to the procedure followed, he made no objection on the ground that the time limited by the agreement had already expired. This clearly constituted a waiver, and had the effect of extending the time within which the award might be made for at least a reasonable period after the hearings began. The time from September 22d to October 3d was not unreasonable.

C. S., sec. 7434, provides:

"Sec. 7434. The court, on motion, may vacate the award upon either of the following grounds, and may order a new hearing before the same arbitrators, or not, in its discretion: . . . .

"2. That the arbitrators were guilty of misconduct or committed gross error in refusing, or cause shown, to postpone the hearing, or in refusing to hear pertinent evidence, or otherwise acted improperly, in a manner by which the rights of the party were prejudiced."

Under the original agreement it was the duty of the Construction Company to erect the buildings at a reasonable cost, the standard for which would be the reasonable market price of materials and the reasonable going wages for labor at the time. Evidence as to these matters was therefore admissible and was made expressly so by the arbitration agreement. The Investment Company claims that the board denied it the right to introduce evidence as to the reasonable cost of construction. This is denied by the Construction Company. The case was heard by the district court mostly upon affidavits, very little oral testimony being introduced. We are in as good position to judge of the weight of the affidavits as the trial court. (McKenzie v. Miller, 35 Idaho 354, 206 P. 505; Jackson v. Cowan, 33 Idaho 525, 196 P. 216; Roby v. Roby, 10 Idaho 139, 77 P. 213; Stoneburner v. Stoneburner, 11 Idaho 603, 83 P. 938; Spofford v. Spofford, 18 Idaho 115, 108 P. 1054; Parsons v. Wrble, 19 Idaho 619, 115 P. 8.) Much of the trouble arose out of the failure of the representative of the Investment Company and the members of the board to express themselves accurately, and the failure to adopt and follow an orderly course of procedure. The harshest critics of courts and lawyers would have to admit that legal procedure, whatever may be its faults, is far superior to the layman's idea of proper procedure as displayed in this record. According to the affidavit of Miss Ricks, who took shorthand notes of what occurred at the hearings, the following colloquy took place at a session of the board between Mr. Ricks on the one hand and arbitrators Mickelson and Jenne on the other:

"H Ricks, Jr.: I would like to know if we will be permitted to introduce evidence as to the cost of the labor and materials used sufficient to construct that portion of the houses in question, or if you have some other procedure you wish to take?

"Mr. Mickelson: Any evidence you have bearing on this case is all right but as to any evidence that comes in in any other man coming out and saying that he would do these things for, I would object to on the ground that we three parties are supposed to be disinterested.

"Mr. Jenne: My idea would be that you could not allow any soul on earth to testify as to what it could have been done for, for it would be adding to the Board of Arbitration. I do not think that it would be allowed in the Court.

"H. Ricks, Jr.: In the event that no other individual is to be allowed to testify as to the price of materials and labor in 1917, it would be necessary to use the Arbitration Board in that way for the purpose of testifying what materials and labor cost.

"Mr. Mickelson: I do not think that was the point to be brought up here, for you to come in and question the board anything of that kind.

"Mr Jenne: I do not think there is any power on earth, from the Mayor of this town to the President of the United States to...