Lamb v. Northern Imp. Co.

• Decision Date: 27 January 1942
• Docket Number: 6800.
• Citation: 3 N.W.2d 77,71 N.D. 481
• Court: North Dakota Supreme Court

3 N.W.2d 77

71 N.D. 481

LAMB, State Highway Commissioner v. NORTHERN IMP. CO.

No. 6800.

Supreme Court of North Dakota

January 27, 1942

Syllabus by the Court.

1. Under the provisions of § 6, chap. 160, S.L.1927 "Providing for the Submission of Controversies Between the State Highway Commission of the State of North Dakota and Parties Contracting Therewith to Arbitration," no arbitration proceedings shall be had unless commenced within six months after the right to arbitration has arisen, except in cases of controversies already existing at the time of the taking effect of the Act; and when no arbitration proceedings are commenced thereunder until after the expiration of the six months' period, such arbitration proceedings under this chapter are void, and any judgment entered thereon is a nullity.

2. By the terms of chap. 72, S.L.1941, the legislature has not provided for the settlement of the judgment entered in this case, and determined that it shall be paid. The law merely makes provision for the payment of any claim involved herein when such payment is ordered by the courts of this State.

3. Where an action is brought by a judgment debtor to enjoin the execution of a judgment rendered against him, and the judgment creditor appears in the case and litigates the issues on their merits, without raising the question that the proper remedy for the judgment debtor was to move to have the judgment set aside, the judgment creditor can not thereafter on appeal to this court, be permitted to change the theory of the case, and urge in this court for the first time that the judgment debtor should have appeared in the original case, and moved to vacate the judgment entered therein, and should not have begun an independent action for that purpose.

Francis Murphy, of Fargo, for appellant.

W T. DePuy, of Grafton, for respondent.

BURR, Chief Justice.

This is an appeal from a judgment of the district court vacating a judgment obtained in arbitration proceedings, which were commenced under the procedure set forth in chapter 160 of the Session Laws of 1927, and enjoining the enforcement of the same. A demand is made for a trial de novo.

The complaint alleges, among other things, that an award by arbitrators, in the sum of $27,845.92, had been made in favor of the defendant and against the State Highway Department, and that judgment had been entered thereon, but that said judgment had been obtained by misrepresentation as to the legality of the proceedings and the award had been made as the result of fraud, collusion, and deception.

It is not necessary to set forth the allegations in the complaint or the answer, as the case was submitted on a stipulation of facts, to which reference will be made hereafter.

The appellant sets forth two main propositions: that the district court was without jurisdiction to entertain this present action as an independent action to vacate the judgment; and that there is no evidence to sustain a finding that the judgment in the arbitration proceedings was obtained by fraud or collusion.

All of the evidence in the case before us is included in the stipulation of facts. The trial court found that the then

"State Highway Commissioner had no legal authority to submit said claim to arbitration and acted beyond his authority in doing so;

"That the facts disclosed by the evidence in this action leave a strong inference of legal fraud upon the State and the Court".

The stipulated facts show that during 1936, the State Highway Department contemplated the initiation and completion of highway work denominated Project WPGM 81 C; that prior to the execution of any contract therefor, and on or about August 13, 1936, the then State Highway Commissioner was made defendant in an action commenced in the district court of Ward County, wherein George B. Cummings et al. were plaintiffs, and the said State Highway Commissioner et al. were defendants; and therein, on August 13, 1936, the State Highway Commissioner was restrained by the district court "from proceeding with the awarding of any contract or doing any work in connection with the project aforementioned".

On the hearing, the trial court sustained a demurrer to the plaintiff's complaint and dissolved the restraining order. The plaintiffs in that action immediately appealed to the supreme court. The basis of that action was that the property and property rights of abutting owners were being taken and damaged without compensation being first made to or paid into court for them.

Under the facts stated in that case, this court, on appeal, in an opinion rendered February 2, 1937, held that the plaintiffs in that action were entitled to an injunction against the State Highway Commissioner and the other defendants, restraining them from erecting the overpass until compensation for damages had been paid as required by the constitutional provisions of this state. See Cummings et al v. City of Minot et al., 67 N.D. 214, 271 N.W. 421.

Upon the remittitur, judgment was entered for such injunction, restraining the beginning of the work described in this contract until full compensation was paid to the plaintiffs in said action; and said final judgment was thereafter satisfied and dismissed by the plaintiffs therein on May 17, 1937.

The stipulation of facts shows further, that: on November 30, 1936, the defendant had entered into a contract with the Department of State Highways "for the construction of part of what is known as Project WPGM 81 C," and according to a provision in the contract, appellant was to "begin construction work when so ordered by the Department of State Highways"; that on December 16 the Department of State Highways ordered the appellant "to begin work on Project WPGM 81C as soon as you are able to secure the proper men and equipment necessary for the work."

The stipulation of facts shows further that the work was completed on May 28, 1938; and Exhibit "P-12" is a notification to the "Senior Highway Engineer, Bureau of Public Works, Bismarck, North Dakota," as follows: "You are hereby notified that the above noted project was completed May 28, 1938. A final inspection has been made and the work has been accepted by the State."

This exhibit is dated June 1, 1938, and is made a part of the stipulation of facts, although the stipulation of facts states that the work was accepted May 28, 1938. However, for the purpose of this case, we assume the acceptance was not until June 1, 1938.

It is expressly stipulated that all of these arbitration proceedings were had under the provisions of chapter 160 of the Session Laws of 1927. There is no other statute involved, so far as the determinative issues are concerned.

Section 1 of this chapter provides: "All controversies arising out of any contract for the construction or repair of highways entered into by the State Highway Commission of the State of North Dakota shall be submitted to arbitration as hereinafter provided, ***."

Section 2 provides: "The party desiring arbitration shall make a written demand therefor and shall in such demand name the arbitrator by him selected. He shall also in such demand set forth all the controversies and claims which he desires to submit to arbitration and a concise statement of his claims with reference to such controversies. Such demand shall be served upon the opposite party, who shall, within ten days, name in writing the arbitrator on his part ***."

Section 3 provides: "When such Board of Arbitration shall have been appointed, a submission in writing shall be executed as provided by Section 8328 Compiled Laws of 1913, ***."

Section 5 provides: "No right shall exist to demand arbitration against the State Highway Commission until the following conditions shall have been complied with; ***" and then proceeds to specify the conditions. It provides that the contractor give notice to the commission that the contract has been performed, or will be performed on a day stated, and that at that time the commission shall cause the work to be inspected, etc. Further: "When the contractor claims in good faith, supported by affidavit furnished to the Commission, that he has completed such additional work according to the specifications furnished him and the Commission fails for ten days to accept such work as completed, he shall have the right to institute proceedings hereunder."

It is clear, therefore, that there is no right to commence or institute proceedings for arbitration until this work has been completed and accepted. The stipulation of facts shows that the work was completed on May 28, and accepted not later than June 1, 1938.

Section 6 of the statute provides: "No arbitration shall be had hereunder unless commenced within six months after the right thereto has arisen," except in cases occurring before the statute was enacted.

It is true that when the defendant received the notice from the commission to commence work, dated May 11, 1937, it answered, Exhibit "P-6", dated May 24, 1937, stating that it had begun work in compliance with this notice, but "The action of the company in commencing such work and carrying the same on, however, is done subject to the right of the company to recover for any damage which may have been caused by the delay due to litigation over which it had no control. This right of compensation is hereby strictly reserved."

Exhibit "P-7" is dated September 9, 1937, is addressed to the State Highway Commissioner, and states, among other things, "The undersigned, Northern Improvement Co., of Fargo, North Dakota, hereby demands and desires the arbitration of the controversies arising out of the contract between the Northern Improvement Co. and the State Highway Commission of the State of North Dakota, for the construction...