Sapp v. Barenfeld

• Decision Date: 06 December 1949
• Citation: 34 Cal.2d 515,212 P.2d 233
• Parties: SAPP et al. v. BARENFELD et al. L. A. 20682.
• Court: California Supreme Court

Page 233

212 P.2d 233

34 Cal.2d 515

SAPP et al. v. BARENFELD et al.

L. A. 20682.

Supreme Court of California, in Bank.

Dec. 6, 1949.

As Modified Dec. 13, 1949.

Laurence J. Rittenband, Los Angeles, and Leo Jay Ross, Beverly Hills, for appellants.

Knight, Gitelson & Ashton and Alfred Gitelson, Los Angeles, for respondents.

TRAYNOR, Justice.

On December 31, 1946 appellants contracted to reconstruct a building owned by respondents that had been damaged by fire. It was agreed that appellants were to restore the building to the condition it was in immediately before the fire in accord with the original plans and specifications. Work was to begin within fifteen days and to be completed within 180 days thereafter. Any dispute arising under the contract was to be submitted to arbitration. A dispute arose over the alleged failure of the appellants to perform the work according to the specifications and to finish it on time. Appellants denied these allegations and sought additional compensation under the contract for extra work performed. On September 2, 1947, the parties agreed in writing to submit their dispute to arbitration. Respondents and appellants each appointed one arbitrator and these two selected a third. All three were qualified architects. on November 19, 1947 the arbitrators rendered a unanimous opinion, finding that appellants had failed to confrom to the specifications in several instances. After deducting the cost of the work necessary to remedy the defects from the balance due appellants under the contract, the arbitrators made an award of $6966.45 to appellants. Pursuant to Section 1287 of the Code of Civil Procedure, appellants petitioned the superior court for an order confirming the award. Respondents contested the petition and moved to vacate the award under Sections 1288(c) and (d) of the Code of Civil Procedure. After a hearing on affidavits, the trial court found (1) that 'Said arbitrators were guilty of misconduct in that they based their award in a large part upon information procured ex parte from third persons, with no notice to the parties hereto that they intended to adopt such a procedure, and gave the parties hereto no opportunity to cross-examine such third persons' and (2) that 'Said arbitrators so imperfectly executed their powers that a mutual, final and definite award, upon the subject matter submitted was not made, in that said arbitrators failed to pass upon respondents Barenfelds' claim for damages for delay in completing the building which was the subject of the controversy.' The court entered an order vacating the award, and this appeal followed.

Appellants do not contend that the trial court's findings of fact are not supported by substantial evidence. They admit that those findings are supported by the evidence and are therefore conclusive on this appeal. The finality of the court's findings of fact cannot, however, be extended to the legal conclusions it derives therefrom, and if those conclusions are incorrect, as appellants assert, the judgment must be reversed.

The findings of the trial court do not support respondents' broad assertions that they were denied notice and hearing. The court found only that the arbitrators had consulted ex parte with a third person as to a specific matter within the submission and that respondents were not present at that consultation. This finding lends no support to respondents' contention that they were wholly denied notice and hearing and that the trial court so found.

The evidence in fact clearly establishes that the arbitrators did hold informal hearings, at each of which the respondents were present and vigorously prosecuted their claims, presenting evidence in support thereof. Respondents' affidavits contradict their allegations that they were denied a hearing and indicate clearly that they were afforded ample opportunity to present their claims to the arbitrators. Although respondents allege that, as far as they know, the arbitrators never held any hearings, the evidence conclusively establishes that this allegation is untrue. Respondents' attorney, by letter to the arbitrators, suggested 'that the arbitrators and the parties meet at the building involved and that the hearings be there held.' Pursuant to this suggestion, the arbitrators made a tour of inspection of the building on September 23, 1947, at which time Abraham Barenfeld was present. Barenfeld states in his affidavit that, on that inspection, he accompanied the arbitrators and 'From time to time as we walked through I would point out objections to various items in the building which had been either improperly constructed or not constructed at all by the petitioners.' Another tour of inspection was conducted on October 9, 1947, Abraham Barenfeld being again present together with one of the Sapps. Both parties actively participated in the discussion of the alleged defects, and respondent 'again stated various objections to the arbitrators that I had to the work of construction by the petitioners which I had not mentioned on their first visit.' The arbitrators made a final tour of inspection on October 21, 1947. Jack Barenfeld admits that he was present at that time and 'pointed out to them numerous items in the building which had been either improperly constructed or not constructed at all.'

There is no evidence that any other hearings were held. There is clear and uncontradicted evidence, supported by the affidavits of the respondents, that these tours of inspection were for all purposes fair and effective hearings that placed no restriction upon respondents' opportunity to advance all relevant claims. Since respondents were present at each of the hearings and participated therein without objection, they cannot attack the award because no formal notice of hearing was given. 'If a party appears and participates without objection in arbitral proceedings * * * such party cannot later object to the award * * * on the ground that he did not have notice of the hearing * * * This is true, it was held, although formal notice of the hearing was expressly stipulated for in a submission agreement.' Sturges, Commercial Arbitration and Awards, § 152, pp. 382-383; Tennessee Coal Iron & R. Co. v. Roussell, 155 Ala. 435, 46 So. 866, 130 Am.St.Rep. 56; Acme Lumber Co. v. Ruby, 237 Mich. 314, 316, 211 N.W. 631; Mississippi Cotton Oil Co. v. Buster, 84 Miss. 91, 36 So. 146, 147; Jacob v. Pacific Export Lumber Co., 136 Or. 622, 639, 297 P. 848; Canuso v. City of Philadelphia, 326 Pa. 302, 307, 192 A. 133; see 6 Am.Jur., Arbitration & Award, § 104.

Respondents, however, apparently contend that the tours of inspection were not valid hearings for the reason that they were not conducted with the formalities of a judicial hearing. This contention is exemplified by the affidavit of respondents' attorney 'That at all times concerned it was and now is your affiant's opinion that arbitrations are to be conducted in the same manner and with the same formalities, excepting, only technical objections as to questions, that a trial in a court is required to be conducted.' It has never been the law that arbitrations are subject to all rules of judicial procedure save those relating to the form of questions. 'The essence of arbitration is its freedom from the formality of ordinary judicial procedure.' Canuso v. City of Philadelphia, 326 Pa. 302, 307, 192 A. 133, 136. All relevant evidence may be freely admitted and rules of judicial procedure need not be observed so long at the hearing is fairly conducted. The hearing may be in the nature of an informal conference rather than a judicial trial. Dana v. Dana, 260 Mass. 460, 464, 157 N.E. 623; Modern System Bakery v. Salisbury, 215 Ky. 230, 236, 284 S.W. 994; Jacob v. Pacific Export Lumber Co., 136 Or. 622, 637, 645, 297 P. 848; Broadhead-Garrett Co. v. Davis Lumber Co., 97 W.Va. 165, 169, 172, 124 S.E. 600. Respondents repeatedly stress the fact that witnesses were not sworn, but in the absence of express agreement there is no requirement that they be sworn. Matter of Silliman, 159 Cal. 155 158, 113 P. 135; Hano v. Isaac H. Blanchard Co., Sup., 199 N.Y.S. 227, 230. 'Arbitration may or may not be a desirable substitute for trials in courts; as to that the parties must decide in each instance. But when they have adopted it, they must be content with its informalities; they may not hedge at about with those procedural limitations which it is precisely its purpose to avoid.' American Almond Products Co. v. Consolidated Pecan Sales Co., Inc., 2 Cir., 144 F.2d 448, 451, 154 A.L.R. 1205.

The disputed questions of fact were determined by the arbitrators on the basis of the claims and evidence adduced at the hearings. Having determined therefrom that the work in some respects did not conform to the specifications, the arbitrators, to determine the amount of the award, consulted ex parte with C. L. Weeks, a skilled cost appraiser, for an estimate of the labor and material cost of remedying the defects. They checked his estimate with several building supply firms and adopted it in making their award after this independent investigation. The award was the result of the arbitrators own judgment, based, however, on information acquired in this manner.

There is no error in such procedure. Although a hearing is required on disputed questions of fact, arbitrators may inform themselves further by privately consulting price lists, examining materials and receiving cost estimates. Sturges, Commercial Arbitration and Awards, § 217, p. 495. This procedure may be ex parte, without notice or hearing to the parties, for 'it is entirely proper for arbitrators, in a case requiring it, to obtain from disinterested persons of acknowledged skill such information and advice in reference to technical questions submitted to them, as may be necessary to enable them to come to correct conclusions, provided that the award is the result of their own judgment after...