Kingston Coal Co. v. Glen Alden Coal Co

• Decision Date: 25 September 1933
• Docket Number: 131
• Parties: Kingston Coal Co. v. Glen Alden Coal Co
• Court: Pennsylvania Supreme Court

168 A. 677

312 Pa. 546

Kingston Coal Co. v. Glen Alden Coal Co

No. 131

Supreme Court of Pennsylvania

September 25, 1933

Argued April 12, 1933

Appeal, No. 131, Jan. T., 1933, by defendant, from judgment of C.P. Luzerne Co., July T., 1931, No. 1436, in case of Kingston Coal Company v. Glen Alden Coal Company. Judgment affirmed.

Assumpsit upon arbitrator's award. Before JONES, J.

The opinion of the Supreme Court states the facts.

Judgment for plaintiff for want of sufficient affidavit of defense. Defendant appealed.

Error assigned, inter alia, was entry of judgment for plaintiff quoting record.

The judgment of the court below is affirmed at appellant's cost.

Robert von Moschzisker, with him Robert Brigham, Allen Hunter White Reese H. Harris, J. H. Oliver and Gilbert S. McClintock and Ballard, Spahr, Andrews & Ingersoll, for appellant. -- The arbitrator had no jurisdiction to reform the contract. The principle that awards of arbitrators will be given legal effect only when they act within the bounds of their agreed jurisdiction has been repeatedly applied by our appellate courts to various sets of facts: Isaac v. Fire Ins. Co., 301 Pa. 351; Zimmerman v. Marymor, 290 Pa. 299; Ahrens v. Reading, 261 Pa. 100; Keiser v. County, 253 Pa. 167; Reilly v. Rodef Sholem Congregation, 243 Pa. 528; Shoemaker v. Riebe, 241 Pa. 402; Kann v. Bennett, 234 Pa. 12; Ruch v. York, 233 Pa. 36; Hunn v. Institution for the Instruction of the Blind, 221 Pa. 403; Somerset Boro. v. Ott, 207 Pa. 539; Jacob v. Weisser, 207 Pa. 484; Dobbling v. York Ry. Co., 203 Pa. 628; Chandley Bros. & Co. v. Boro., 200 Pa. 230.

The arbitrator's power to decide the matter alleged as the point of dispute must clearly appear from the submission agreement, which will not be enlarged beyond its plain terms: Zimmerman v. Marymor, 290 Pa. 299; Kann v. Bennett, 234 Pa. 12; Ruch v. York, 233 Pa. 36; Somerset Boro. v. Ott, 207 Pa. 539; Chandley Bros. & Co. v. Boro., 200 Pa. 230; Lauman v. Young, 31 Pa. 306; Citizens Trust & Surety Co. v. Howell, 19 Pa.Super. 255.

An arbitrator may not ordinarily reform a contract: Ahrens v. Reading, 261 Pa. 100; Drhew & Bell v. Altoona, 121 Pa. 401; Koch v. Kuhns, 6 Pa.Super. 186.

Robert T. McCracken, with him George G. Chandler and Edwin Shortz, Jr., for appellee. -- Public policy, as well as freedom of contract, demands that arbitration agreements shall be valid, irrevocable and enforceable: Bashford v. Land Co., 295 Pa. 560; Curran v. Phila., 264 Pa. 111; Adinolfi v. Hazlett, 242 Pa. 25.

The award of the arbitrator is final and conclusive and may not be reversed or set aside for any mistake of fact or law: P.O.S. of A. v. Ins. Co., 305 Pa. 107.

Before FRAZER, C.J., KEPHART, SCHAFFER, DREW and LINN, JJ.

OPINION

MR. CHIEF JUSTICE FRAZER:

Defendant appeals from judgment entered for want of a sufficient affidavit of defense in an action of assumpsit upon an arbitrator's award. The amount of the judgment was $521,755.79 with interest, which represented payments due for coal mined and delivered by plaintiff to defendant during six years preceding 1929, together with interest thereon. Arbitration was had under the provisions of a contract executed in 1916 between appellee and appellant's predecessor, the Delaware, Lackawanna & Western Railroad Company, hereinafter referred to as Railroad. By the terms of this agreement, appellee was to mine and deliver to Railroad coal owned by the latter underlying specified tracts of land, upon terms and conditions more particularly set forth in the instrument itself. The fifth paragraph of the contract provided as follows: "The Railroad Company shall pay to the Coal Company [appellee] for all the coal delivered to it the same prices per ton (less forty-five cents per ton for each and every size so delivered, down to and including barley coal), size for size, as the Railroad Company obtains from the sale of its coal at its breakers in the Wyoming and Scranton Regions for the months then being, provided said prices at its said breakers shall not be less than" designated minimums for each size of coal. It was further recited in the fourteenth paragraph: "If any dispute shall arise between the parties hereto touching this contract or its fulfillment, or any right claimed by either party because thereof or because of their relation to each other, . . . on notice from either party the matter shall be heard by the Hon. Henry A. Fuller . . . and the decision of the arbitrator shall be final and binding."

In 1920 the Kingston Coal Company complained that it was not receiving adequate payment for coal mined under the provisions of the contract, inasmuch as the Railroad, instead of paying the current market prices, was paying only the price at which it was selling coal at its breakers to its controlled subsidiary, the Delaware, Lackawanna & Western Coal Company, hereinafter called Lackawanna Company. Payments after this date were received only on account and subject to the protest already made. All attempts to reach an amicable settlement having failed, the matter was finally heard by the arbitrator named in the contract, although from the beginning appellant insisted there was no arbitrable dispute pending and that the arbitrator was without jurisdiction in the premises. This objection was overruled and after an exhaustive hearing the arbitrator made his award, as stated above, basing his conclusion on the ground that the payments made by Railroad Company, although within the letter of the contract, were not within its spirit, inasmuch as the prices paid were above the stipulated minimums but not equivalent to the current circular rates, at which coal companies in general marketed their product. The arbitrator found as a fact that contemporaneous circumstances indicated that the parties contemplated payment on the basis of the so-called circular prices. "Circular prices," as used by the arbitrator, appellee contended, at argument before this court, to mean current market prices at mine-mouth or breaker, and both sides agree that they are distinguishable from tidewater prices in that the latter include transportation charges. Because of the community of interest between Railroad Company, Lackawanna Company and the Glen Alden Coal Company, appellant, (which latter company was organized in 1921 by Railroad to take over all its interest in its coal lands and which in 1925 acquired approximately all the stock of Lackawanna Company), it was profitable to the shareholders of the three companies to make payment to Kingston Coal Company at prices lower than the prevailing market prices. The arbitrator found that the close corporate intimacy of the three companies discredited the good faith of their dealings with appellee. In making his award, the arbitrator, although recognizing that the statute of limitations technically did not apply, nevertheless limited recovery to the six years immediately preceding submission of the controversy to arbitration.

The Glen Alden Company steadfastly refused to acknowledge the validity of the award, and suit was accordingly brought in the Court of Common Pleas of Luzerne County by the Kingston Company to recover the sum designated by the arbitrator. Plaintiff attached as exhibits to its statement of claim copies of the contract of 1916 and of the arbitrator's decision. Defendant moved to strike off the statement of claim alleging the copy of the award was incomplete (a) in that it failed to include the requests for findings of fact and conclusions of law submitted to the arbitrator and the answers thereto made by him, and (b) in that it failed to set forth exceptions to the award nisi. At the same time defendant petitioned for a rule to show cause why a more specific statement of claim should not be filed, alleging practically the same reasons as set forth in its motion to strike off. Both rules were discharged and defendant ordered to file an affidavit of defense, which order was complied with, whereupon pl...