Munson v. Straits of Dover, S.S. Co.
| Decision Date | 24 May 1900 |
| Docket Number | 162. |
| Citation | 102 F. 926 |
| Parties | MUNSON v. STRAITS OF DOVER S.S. CO., Limited. |
| Court | U.S. Court of Appeals — Second Circuit |
Charles S. Haight, for appellant.
J Parker Kirlin, for appellee.
Before WALLACE, LACOMBE, and SHIPMAN, Circuit Judges.
The court below dismissed the libel in this cause upon sustaining the exceptions of the respondent. 99 F. 787. The decision proceeded upon the theory that the libelant was not entitled to recover any damages by reason of the breach by the respondent of the arbitration covenant in a charter party entered into between the libelant and the respondent. The charter party contained, among others, the following clause:
'That should any dispute arise between the owners and the charterers, the matter in dispute should be referred to three persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen that their decision, or that of any two of them, shall be final, and, for the purpose of enforcing any award, this agreement may be made a rule of the court.'
Differences arose between the parties as to the liability of the libelant, under the terms of the charter party, for the detention of the vessel beyond the period for which it had been chartered. The libelant thereupon notified the respondent that he was willing to arbitrate, and requested him to comply with the provisions of the charter party in that regard; but the respondent refused, and brought an action in admiralty to enforce the liability, claiming a recovery of about $8,000. In that action the court decided that the present libelant was not liable for the detention of the vessel, and decreed in his favor, but without costs. He was subjected to necessary expenses in defending the action amounting to over $500. The libel alleges these facts, and also alleges that the expenses of arbitrating the dispute would not have exceeded $50.
Covenants in contracts to arbitrate any disputes that may arise in fulfilling the obligations of the parties are common, but it is significant that there are no adjudged cases in which there has been a recovery when the breach consisted merely in the refusal to enter upon an arbitration. The explanation is doubtless to be referred to the impossibility of proving substantial damages. There are many cases in the books where there having been an actual submission, damages have been allowed for a subsequent revocation. In such cases the receding party has led the other into the expense of making a futile experiment, and the expenses incurred thereby result directly from his act, and can be definitely ascertained. But where nothing has been done in partial execution of the covenant, and the covenant does not fix anything by way of penalty or liquidated damages, the loss arising from a refusal to fulfill is usually wholly conjectural, because it is impossible to prove that the party would have profited by the arbitration. Livingston v. Ralli, 5 El. & Bl. 132, is the only reported case in which the action was for the breach of the covenant while...
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