Leslie v. Leslie

• Decision Date: 17 May 1892
• Parties: LESLIE v. LESLIE.
• Court: New Jersey Court of Chancery

24 A. 319

50 N.J.E. 103

LESLIE

v. LESLIE.

Court of Chancery of New Jersey.

May 17, 1892.

(Syllables by the Court.)

Suit by Edward Leslie against John S. Leslie to annul a certain award in proceedings by arbitration. On demurrer to the bill. Demurrer overruled.

Eugene Stevenson, for complainant.

John W. Griggs, for demurrant.

VAN FLEET, V. C. The object of this suit is to procure a decree annulling an award made by two arbitrators. This relief is sought on two grounds: First, that the arbitrators exceeded their authority; and, second, that their award is uncertain and inconclusive; in other words, that it is neither certain nor final. Another ground is attempted to be alleged, namely, that the arbitrators refused to hear material evidence; but the bill, on this point, is so defective in essential respects as to state no ground of action whatever. All that it avers is that the arbitrators refused to hear several material witnesses which were offered on behalf of the complainant, but what facts these witnesses would testify to is not stated, nor is it alleged that the arbitrators were informed what was the nature or character of the evidence they would give. So that, if it be assumed that everything alleged in the bill with the requisite legal certainty is true, still it is apparent that the bill fails to show that the arbitrators refused to hear a single word of material evidence. The pleader, it is true, says they did, but that is all he says. He gives his opinion respecting the nature of the rejected evidence, but not the evidence itself. The issue which the bill tenders on this point is wholly immaterial. The question is not, did the arbitrators refuse to hear evidence which, in the judgment of the pleader, was material? On the contrary, the only question that can be raised touching the action of the arbitrators in rejecting evidence which can affect the validity of the award is, did they refuse to hear evidence which, in the judgment of the court, was material? That question, it will be observed, cannot be tried on this record, because, as it now stands, it contains neither a statement of the rejected evidence, nor even a hint of what it was. The causes which led to the agreement under which the award in question was made may be stated with sufficient fullness for the purposes of the present discussion, as follows: The complainant and defendant owned the whole of the capital stock of the Leslie Brothers Manufacturing Company, a corporation organized under the laws of this state with a capital of $500,000, divided into 5,000 shares of $100 each, and doing business in the city of Paterson in the manufacture of steam snow plows, locomotives, and other machinery and appliances. Each owned 2,500 shares of the stock of the corporation, and the defendant was its president and general manager, the complainant was vice president, and a third person acted as secretary and treasurer. While the parties were thus equal in property and power, disputes arose respecting the conduct of the business of the corporation, which became so bitter and dangerous to its prosperity that both desired that a separation of their corporate interests should take place by the retirement of one of them from all participation in the affairs of the corporation. They were, however, unable themselves to agree upon any basis of settlement, but were willing to leave the question as to which one should retire by the sale of his stock, and what the other should pay him for his stock, to be settled by arbitration. To accomplish these objects, the parties, by an agreement under seal, appointed two arbitrators, and gave them power, in the language of the agreement, "to decide and direct which of the said parties shall sell to the other all his capital stock of said company, and the terms upon which said sale shall be made, and how and when the same shall be paid for," with additional power to carry their award into effect by an actual transfer of the stock; and to this end the agreement required the parties to deposit their stock, assigned in blank, with the arbitrators, so that on the publication of the award the arbitrators might at once transfer the stock of the party that they decided should sell to the party that they decided should buy. Both parties deposited their stock as the agreement required, and the stock of the complainant was, immediately after the publication of the award, transferred to the defendant. The parties signed this agreement on the 20th day of April, 1891, and three days afterwards, on April 23d, the arbitrators made their award. They awarded, in the first place, that the complainant should sell his stock, "and any and all his rights in connection with said company," to the defendant, and that the defendant should pay to the complainant $23,000. Eleven thousand dollars" of this sum they directed to be paid, in the language of the award, "in the following manner: The sum of $8,000 in cash within three days after the making of this award, and giving to the said Edward Leslie a receipt in full up to this date of all moneys due by the said Edward Leslie to the said John S. Leslie or to said company, which amounts we, the said arbitrators, declare to be $3,000." Six thousand dollars more was to be paid on or before May 1, 1892, its payment to be secured by a bond executed by the defendant, with a surety, who is named. The remaining $6,000 was to be paid on or before May 1, 1893, its payment to be secured by the pledge of 1,000 shares of the stock of the Leslie Brothers Manufacturing Company. They also awarded, to quote the language of the award, "to the said Edward Leslie, a bonus of $1,000, to be paid on each rotary snow plow hereafter built and sold by the said Leslie Brothers Manufacturing Company, or its assigns, until the said sum of $1,000 is paid on fifty plows, after which number said payment of $1,000 shall cease to be made. * * * The aforesaid bonus of $1,000 is to be paid on the 1st day of May in each and every year upon all plows built and disposed of within the term of one year previous to the date of such payment; the first of such payments of bonus to be made on the 1st day of May, 1892." The case is before the court on demurrer. All the facts given in the preceding statement are well pleaded, and must therefore, for present purposes, he considered as admitted.

The doctrine is obviously fundamental that it is essential to the validity of an award that it be confined to those things which, by the agreement of arbitration, are submitted to the judgment of the arbitrators, and that it shall not extend to those which are not within the terms of the submission. Caldwell says: It is one of the requisites of a valid award that it be consonant to the submission. "The award must not extend to persons or things beyond the scope of the submission." Caldw. Arb. 226, 227. And Kyd says: "The award must not extend to any matter not comprehended within the submission. Thus, if the submission be confined to a particular subject of dispute, while there are other things in controversy between the parties, an award which extends to any of these other things is void, as far as it respects them." Kyd, Awards, 141. This principle has been recognized and enforced by both this court and the supreme court. Young v. Young's Ex'rs, 6 N. J. Eq. 450; Hazen v. Addis, 14 N. J. Law, 333. Nothing, it seems to me, can be clearer, both as a principle of sound law and of plain natural justice, than that where two persons submit, in plain and clear terms, one; particular dispute or controversy to the determination of a third, as their judge, his authority must be considered to be inflexibly limited to a decision of that one particular matter, and that any attempt by him to pass judgment upon any other question must be held to be unauthorized and beyond his power, and consequently without the least legal force. The submission is the commission of the arbitrator. By force of it he becomes a judge, with absolute power over the things submitted to his judgment. So long as he acts uprightly and impartially, and keeps within the limits of his authority, and deprives neither party of a full and fair hearing, his judgments are unimpeachable and irreversible. He may do what no other judge has a right to do; he may intentionally decide contrary to law, and still have his judgment stand. This was so declared in Bell v. Price, 22 N. J. Law, 578, 590, where Mr. Justice Carpenter, in pronouncing the judgment of the court of errors and appeals, said, in substance, that, if arbitrators mean to decide according to law, but mistake the law in a material respect, and their mistake appears on the face of the award, or they admit it, the award will be set aside because it does not express their real judgment; but in cases where they do not intend to let the law govern their judgment, but to decide according to their own notions of what is just and right, the courts will not interfere, but allow their award to stand. Caldw. Arb. 140; Kyd, Awards, 351. The reason that this is so is that an award is the decision of a tribunal which the parties themselves create, and by whose judgment they mutually agree, when they create it, that they will abide. As a general rule they are unlettered tribunals; at least without legal learning. They have been called "rustic forums." The design of the parties in creating them is to have their disputes speedily and economically settled, by a decision which shall be final and unalterable. Economy and finality are the con-trolling considerations which lead to their creation. It is manifest that, if the decisions of such a tribunal were subject to be tried by the strict rules of the law, an...