Nelson v. Atlantic Coast Line R. Co.

• Decision Date: 27 November 1911
• Citation: 72 S.E. 998,157 N.C. 194
• Parties: NELSON v. ATLANTIC COAST LINE R. CO.
• Court: North Carolina Supreme Court

72 S.E. 998

157 N.C. 194

NELSON v. ATLANTIC COAST LINE R. CO.

Supreme Court of North Carolina

November 27, 1911

Appeal from Superior Court, Pitt County; Ferguson, Judge.

Action by W. C. Nelson against the Atlantic Coast Line Railroad Company. Judgment for plaintiff, and defendant appeals. New trial ordered.

Under regulations of the relief department of a railroad company requiring controversies to be submitted to the superintendent and making his decision, or that on appeal therefrom to an advisory committee, conclusive, suit cannot be maintained to recover benefits covering a period during which such officers found the beneficiary to be no longer under disability, in the absence of fraud and undue influence.

This is an action to recover benefits, which the plaintiff alleges he is entitled to, under the rules and regulations of the relief department of the defendant. The plaintiff, an employé of defendant, became a member of the relief department on the 28th of June, 1902, and paid his dues, amounting to $6.15, up to the 6th day of September, 1902, when he was accidentally injured. After his injury he was paid, as benefits on account of his disability to work, $1 per day for 12 months, and thereafter 50 cents per day up to May 15, 1905, making a total of $673.50. On or about the last day, the superintendent of the department decided that the plaintiff was able to return to work, and he was notified to do so; but he refused, contending that he was still unable to work. The plaintiff appealed from the decision of the super intendent to the advisory committee, and employed counsel to represent him. He was given a hearing by the committee, and this tribunal held that he was no longer under disability. He then began this action, and the defendant pleads, as a defense the rules and regulations of the department, and the decision of the advisory committee.

There is no evidence of fraud and no claim that the injury to the plaintiff was due to negligence. The regulations of the department are fully stated in Barden v. Railroad, 152 N.C. 318, 67 S.E. 971, and in King v. Railroad, 72 S.E. 801, at this term, and it is not necessary to do more than quote the part particularly relied on, which is as follows: "(65) All claims of members, or of their beneficiaries or other representatives, for benefits, and all questions or controversies of whatsoever character, arising in any manner or between any parties or persons, in connection with the relief department or the operation thereof, whether as to the construction of language or the meaning of the regulations or acts in connection with the operation of the department, shall be submitted to the determination of the superintendent, whose decision shall be final and conclusive thereof, unless a written appeal from his decision is made to the committee. If the party or parties so submitting any matter to the superintendent shall be dissatisfied with his decision, such party or parties shall appeal to the committee within thirty days after notice to the parties interested of the decision of the superintendent. When an appeal is taken to the committee it shall be heard by said committee without further notice at their next stated meeting, or at such future meeting or time as they may designate, and shall be determined by vote of the majority of a quorum, or if any other member not less than a quorum of the members present at such meeting, and the decision arrived at thereon by the committee shall be final and conclusive upon all parties without exception or approval."

There was evidence on the part of the plaintiff that he was unable to work on May 15, 1905, and that this disability continued up to the time of the trial, and evidence to the contrary by the defendant.

The defendant requested the following special instruction, which was refused, and defendant excepted: "That, if you believe the evidence in the case, the plaintiff was at the time of the alleged injury a member of the relief department of the Atlantic Coast Line Company, and agreed to be bound by the rules and regulations of said relief department, and accepted benefits therefrom in accordance with the said rules and regulations and that there is no evidence that any fraud or deceit of any character was practiced upon the plaintiff, either in signing the application for membership in said relief department, or in inducing him to accept the benefits in said department after his said injury, and that the plaintiff voluntarily accepted benefits and elected thereby to obtain his rights under said contract in accordance with the rules and regulations of said relief department; and the court therefore charges you that as the plaintiff has submitted the questions in controversy in this action to the tribunal provided for in the rules and regulations of said relief department, of which he was a member, and the same having been duly and orderly considered by said advisory committee of said relief department, the plaintiff under the terms of his contract, as a matter of law, is bound thereby, and he cannot maintain this action, no fraud or undue influence having been proven, you will answer the issue as to the right of recovery by plaintiff in this action, 'No."'

There was a verdict and judgment in favor of the plaintiff, and defendant excepted and appealed.

Harry Skinner, for appellant.

Julius Brown, for appellee.

ALLEN J. (after stating the facts as above).

The question involved in this case is of general importance, and the principle announced will determine, in this state, the right of all benefit societies and fraternal orders, which provide for the payment of benefits to sick or disabled members, to establish, within the society or order, some tribunal with power to investigate the fact, upon which the right to the benefit may depend, and whose decision shall be final, unless impeached for fraud.

We cannot declare that the decision of such a tribunal is binding upon a member who belongs to a fraternal order, and refuse to enforce it, on substantially the same facts because it is invoked in behalf of the relief department of a railroad.

The principal contentions of the plaintiff, assailing the validity of the decision of the advisory committee, are that it is practically an arbitration; that on the facts developed a property right is involved; that an agreement to submit such a right to arbitration in advance of the controversy is invalid, because it is an agreement which ousts the courts of their jurisdiction, and that the advisory committee was not fairly constituted.

The defendant replies that, if the action of the advisory committee is to be governed by the strict rules of an arbitration, no property right was submitted to the committee, but only the ascertainment of a single fact that the committee was impartially constituted, and, if not, that the plaintiff submitted his claim with full knowledge of the facts, and that there has been an award, which is final. The defendant further says that the principles relied on are not applied, without qualification, in behalf of a member of an organization, who acquires his property right, under and by virtue of its regulations.

There is some difference of opinion as to the motive behind the adoption of the rule that an agreement in advance of a controversy to submit all questions of law and fact to arbitration is not enforceable, some attributing it to the jealousy of the courts and a desire to repress all attempts to encroach on the exclusiveness of their jurisdiction, and others to an aversion, from reasons of public policy, to sanction contracts by which the protection which the law affords the individual citizen is renounced (Canal Co v. Coal Co., 50 N.Y. 258); but the tendency of the later decisions is to relax the rule.

In the case from New York, the court says: "An agreement of this character induced by fraud, or overreaching, or entered into unadvisedly through ignorance, folly, or undue pressure, might well be refused a specific performance, or disregarded when set up as a defense to an action. But when the parties stand on an equal footing, and intelligently and deliberately, in making their executory contracts, provide for an amicable adjustment of any difference that may arise, either by arbitration or otherwise, it is not easy to assign, at this day, any good reason why the contract should not stand, and the parties made to abide by it and the judgment of the tribunal of their choice. Were the question res nova, I apprehend that a party would not now be permitted, in the absence of fraud or some peculiar circumstances entitling him to relief, to repudiate his agreement to submit to arbitration and seek a remedy at law, when his adversary had not refused to arbitrate, or in any way obstructed or hindered the arbitration agreed upon. *** The better way, doubtless, is to give effect to contracts, when lawful in themselves, according to their terms and the intent of the parties, and any departure from this principle is an anomaly in the law, not to be extended or applied to new cases unless they come within the letter and spirit of the decisions already made. The tendency of the more recent decisions is to narrow rather than enlarge the operation and effect of prior decisions, limiting the power of contracting parties to provide a tribunal for the adjustment of possible differences, without a resort to courts of law; and the rule is essentially modified and qualified."

This is in line with the statement of Chapman, J., in Hood v Hartshorn, 100 Mass. 117, 1 Am. Rep. 89, that "judicial tribunals are provided by the government to enable parties to enforce their rights when other means fail, but not to hinder them from adjusting their differences...