Puget Sound Bridge & Dredging Co. v. Lake Washington Shipyards

• Decision Date: 20 November 1939
• Docket Number: 27687.
• Citation: 96 P.2d 257,1 Wn.2d 401
• Court: Washington Supreme Court
• Parties: PUGET SOUND BRIDGE & DREDGING CO. v. LAKE WASHINGTON SHIPYARDS.

96 P.2d 257

1 Wn.2d 401

PUGET SOUND BRIDGE & DREDGING CO. v. LAKE WASHINGTON SHIPYARDS.

No. 27687.

Supreme Court of Washington

November 20, 1939

Department 2.

Arbitration proceeding between the Puget Sound Bridge & Dredging Company a corporation, and the Lake Washington Shipyeards, a corporation. From a judgment of the superior court approving an arbitration award and granting recovery thereon, the Puget Sound Bridge & Dredging Company, a corporation, appeals.

Affirmed.

Appeal from Superior Court, King County; Calvin S. Hall, judge.

Skeel McKelvy, Henke, Evenson & Uhlmann, of Seattle, for appellant.

G. E Steiner, of Seattle, for respondent.

STEINERT Justice.

This is an appeal from a judgment of the superior court approving an arbitration award and granting recovery thereon.

Appellant, Puget Sound Bridge & Dredging Company, a corporation, employed respondent, Lake Washington Shipyards, a corporation, as contractor to do certain work and furnish certain material in the repair and equipment of appellant's motor ship. After the work had been completed, a dispute arose between the parties as to the amount owing on the contract. respondent claimed a total of $5,994.99; appellant admitted liability to the extent only of $2,895.

Being unable to reach a settlement, the disputants entered into a written agreement to arbitrate the matter. The agreement provided that two members of a certain firm of marine surveyors, who were appointed as arbitrators, should meet as soon as reasonably convenient, with power to determine the merits of the controversy and, upon the conclusion of the arbitration, to make and execute an award, to which the parties agreed to submit. The agreement contained no specific directions as to the manner in which the arbitrators should proceed, but merely provided, generally, that the arbitration should be conducted in all respects in accordance with the laws of the state of Washington, except where the agreement, by express modification, indicated the contrary.

The arbitrators filed their oaths and shortly thereafter entered upon an investigation and inquiry, conducted as follows: They wrote to repondent requesting that it furnish them with a copy of its invoices, work orders, and any other details in support of its claim. At the same time, they wrote to appellant requesting it to furnish them with a copy of its specifications for the job in order that they might be informed as to what work and material had been ordered, and also advising appellant that they were asking respondent for a copy of its claim. Later, one of the arbitrators called on the appellant and was given copies of its correspondence, drawings, and invoices, with particular reference to the items in dispute. After the arbitrators had examined these papers, and following several visits to appellant's place of business, they asked that, in order to make an intelligent report, they might be permitted to inspect the vessel which was then in dry dock at Portland. The request was granted, and arrangements for such inspection were made by appellant's president. He declined, however, to accompany the arbitrators on the trip and, instead, sent the company's superintendent who was more familiar with the details of the work done by respondent.

An inspection of the ship was made, with the superintendent present. Respondent's invoices, which the arbitrators then had with them, were checked over, item by item, and compared with the work performed, and the objections then raised by the superintendent to any item were discussed and considered.

After their return from Portland, the arbitrators made several trips to respondent's plant where they interviewed the secretary and also the foreman of that company, and audited its time and material slips pertaining to the job. Then, at the request of appellant's president, the arbitrators interviewed the owner of an independent machinery business, who was an expert in installing Diesel engines. They discussed with the expert each item of the invoices and considered his opinion thereon.

At none of these various investigations and in none of the conferences with either party was any representative of the other party present, although each was aware of the course which the arbitrators were pursuing.

At the conclusion of their investigation, the arbitrators prepared and filed in court their award, in which respondent was allowed the full amount of its claim less a credit of $259.36 in favor of appellant.

Other factual details upon which appellant further relies will be set forth as they become relevant to the argument.

After the award had been made and transmitted to the court, appellant filed its exceptions thereto, alleging that the arbitrators had misbehaved themselves in the case and that the award had been procured by undue means in that (1) the arbitrators had failed to hold or conduct meetings at fixed or specified times according to law, and (2) although appellant had requested and had been promised the opportunity to attend such hearing and present testimony material to the dispute and to a proper settlement thereof, it had neither been notified or any such hearing nor been permitted to present its evidence.

The cause came on duly for trial Before the court, and, after hearing the evidence upon the issue presented, the court overruled appellant's exceptions and entered judgment on the award, from which this appeal was taken.

Appellant does not now contend that the arbitrators committed error of either fact or law, or that the award was procured through corruption. Its contention is that the arbitrators acted under a misconception of their duties and that as a result appellant has not had its day in court.

In disposing of this case we will consider: (1) The rights of interested parties with respect to a hearing in arbitration proceedings, and (2) whether, under the evidence in the case, appellant has been deprived of any of its legal rights.

Contrary to the practice and procedure in the vast majority of the states, this jurisdiction does not recognize or permit common law arbitration, one of the distinguishing features of which is that an agreement for such arbitration is revocable. In this state, the proceeding is wholly statutory and the rights of the parties thereto are governed and controlled by statutory provisions. Dickie Mfg. Co. v. Sound Construction & Engineering Co., 92 Wash. 316, 159 P. 129; Suksdorf v. Suksdorf, 93 Wash. 667, 161 P. 465; Puget Sound Bridge & Dredging Co. v. Frye, 142 Wash. 166, 252 P. 546; Smith v. Department of Labor and Industries, 176 Wash. 569, 30 P.2d 656; Fisher Flouring Mills Co. v. United States, 9 Cir., 17 F.2d 232. Compare, Gord v. F. S. Harmon & Co., 188 Wash. 134, 61 P.2d 1294.

The procedure for arbitration is prescribed by Rem.Rev.Stat. §§ 420 to 430, inclusive. We quote, directly or indirectly, those provisions which are particularly relevant to the question of the rights of the parties in such proceedings:

'All persons desirous to end, by arbitration, any controversy, suit, or quarrel, except such as respect the title to real estate, may submit their difference to the award or umpirage of any person or persons mutually selected.' Rem.Rev.Stat. § 420.

The agreement to arbitrate must be in writing, signed by the parties. Rem.Rev.Stat. § 421. The arbitrators shall be duly sworn to 'try and determine' the cause referred to them and make out a just award. Rem.Rev.Stat. § 422.

'The party against whom an award may be made may except in writing thereto for either of the following causes:----

'1. That the arbitrators or umpire misbehaved themselves in the case;

'2. That they committed an error in fact or law;

'3. That the award was procured by corruption or other undue means.' Rem.Rev.Stat. § 424.

'If upon exceptions filed it shall appear to the said superior court that the arbitrators have committed error in fact or law, the court may refer the cause back to said arbitrators * * *.' Rem.Rev.Stat. § 425.

'Arbitrators, or a majority of them, shall have power,----

'1. To compel the attendance of witnesses duly notified by either party, and to enforce from either party the production of all such books, papers, and documents as they may deem material to the cause; '2. To administer oaths or affirmations to witnesses;

'3. To adjourn their meetings from day to day, or for a longer time, and also from place to place, * * *

'4. To decide both the law and the fact * * * involved in the cause * * *.' Rem.Rev.Stat. § 426.

'The laws in force in this state relating to evidence and the manner of procuring the attendance of witnesses shall govern in arbitrations.' Rem.Rev.Stat. § 427.

The award, when affirmed, has the force of a judgment. reM.reV.stat. § 430.

The purpose of this legislation was to provide an expedient, inexpensive, and effective method of settling disputes. School District v. Sage, 13 Wash. 352, 43 P. 341. Its effect was to substitute arbitration for the preliminary part of a judicial hearing and to make the decision of the arbitrators, when affirmed, a judgment. As expressed in Dickie Mfg. Co. v. Sound Construction & Engineering Co., 92 Wash. 316, 159 P. 129, the board of arbitrators becomes a temporary court of justice, 'a little court' set up by the parties themselves.

An arbitration proceeding is judicial in nature, and its basic requisite, like that of all English and American jurisprudence, is that persons whose rights and obligations are affected thereby have an absolute right to be heard and to present their evidence, after reasonable notice of the time and place of the hearing. 3 Am.Jur. pp. 929-931, §§ 102, 103, 104; 2 R.C.L. pp. 377-380, §§ 24, 25; 6 C.J.S Arbitration and Award, pp. 198, 200, §§...