Stradinger v. City of Whitewater, 76-305

• Decision Date: 01 May 1979
• Docket Number: No. 76-305,76-305
• Citation: 89 Wis.2d 19,277 N.W.2d 827
• Parties: Emil J. STRADINGER, Plaintiff-Respondent, v. CITY OF WHITEWATER, Defendant-Appellant.
• Court: Wisconsin Supreme Court

Page 827

277 N.W.2d 827

89 Wis.2d 19

Emil J. STRADINGER, Plaintiff-Respondent, v. CITY OF WHITEWATER, Defendant-Appellant.

No. 76-305.

Supreme Court of Wisconsin.

Argued Jan. 2, 1979.

Decided May 1, 1979.

Clark Dempsey, Whitewater (argued), for defendant-appellant; Dempsey & Harrison Law Office, Whitewater, on brief.

John O. Olson, Lake Geneva (argued), for plaintiff-respondent; Braden & Olson, Lake Geneva, on brief.

ABRAHAMSON, Justice.

This appeal is from a judgment entered upon an order of the trial court confirming an arbitration award made in favor of Emil Stradinger against the City of Whitewater. Secs. 298.09, 298.12, Stats. The trial court denied the City's motion to reconsider its decision and to vacate the judgment. We affirm.

I.

In May, 1973, the City of Whitewater contracted with Stradinger to operate the City's sanitary landfill. The City became dissatisfied with Stradinger's work and terminated the contract.

After the City Council rejected Stradinger's claims for payment, Stradinger began a lawsuit against the City seeking payment allegedly due under the contract and money damages. The City denied the material elements of Stradinger's complaint and filed a counterclaim for $14,331, which it alleged to be extra expense incurred because of Stradinger's breach of his agreement. The City also entered a plea in abatement, citing Stradinger's noncompliance with the contract clause requiring arbitration of disputes. ¹

Stradinger did not contest the plea in abatement but, instead, the parties voluntarily agreed to arbitration. By letter Stradinger's attorney hedged the agreement with statements that it was Stradinger's understanding that the arbitration was unnecessary because Stradinger had performed on the contract and that Stradinger was proceeding to arbitration on the understanding that the contract "envisions something less than binding arbitration . . . (and) that both parties are left to their legal remedies in the Courts of Law."

The City made no written objection to Stradinger's statement of the "understanding" under which the arbitration would be conducted and did not press for a ruling on its plea in abatement. The parties proceeded to arbitration, choosing three arbitrators in the manner provided by the contract.

The arbitration was conducted in a formal manner with hearings at which a reporter was present so that transcripts were available for the use of the arbitrators.

It appears from the record that the parties and arbitrators agreed that seven questions would be submitted to the panel. ² The panel ultimately answered each question, but its decision was first submitted in the form of a short letter which stated that a total of $3,920 would be a "fair and equitable" amount for the City to pay Stradinger in settlement.

The City Council rejected the panel's decision and notified Stradinger that it wished to proceed to trial. Stradinger promptly filed an answer to the City's counterclaim and then filed notice of readiness for trial. There was a pre-trial conference in February, 1976, and the trial date was set for June 9th. On May 18th, at the City's request, the trial was rescheduled for October 18th, and notice of the new trial date was sent to Stradinger. Three days later, on May 21, 1976, Stradinger took a different tack he filed a motion for an order confirming the arbitration award pursuant to sec. 298.09, Stats. ³

The City, which originally had entered the plea in abatement to allow for arbitration opposed the motion to confirm the award, submitting an affidavit arguing (1) that the arbitration proceedings were never intended to be binding on the parties; (2) that the court lacked jurisdiction because the submission to arbitration acted as an automatic discontinuance of the legal action; and (3) that the award was defective in that it was not signed by the arbitrators or a majority of them as required by sec. 298.08, Stats., and did not answer all of the questions.

Stradinger responded to the City's third objection by submitting a copy of the seven questions, all answers filled in, signed Nunc pro tunc by all three arbitrators. (See note 2 Supra.)

The trial court confirmed the arbitrators' award concluding that the contract called for binding arbitration and that all the issues, including the City's counterclaim, had been submitted in the seven questions and had been considered by the arbitrators.

The City moved for reconsideration and vacation of the judgment under sec. 269.46(3), Stats.1973, ⁴ submitting several affidavits and exhibits tending to show (1) that Stradinger had received frequent warnings about what the City considered to be his unsatisfactory performance and had indicated that he would quit and that the City could cancel the contract; (2) that the parties agreed before beginning the arbitration process that the process would not bind either of them; and (3) that the City, proceeding on the understanding that the arbitration was not binding, did not present evidence on its counterclaim and at one point waived testimony of a Department of Natural Resources official who did not appear at the hearing as scheduled. Stradinger put in no counter affidavits in opposition to the motion to reconsider.

The trial court denied, without written opinion, the City's motion for reconsideration. The City appeals from the trial court's judgment confirming the award and from its order denying reconsideration of the judgment. We affirm.

II.

The City argues that the contract does not provide for binding enforceable arbitration. That part of the contract relating to arbitration provides as follows:

"9. In the event that the contractor shall fail to carry out the requirements of this service for a period of more than seven (7) days, and provided such failure shall not be due to strikes, catastrophe, acts of God, or other cause beyond the contractor's control, the City may see fit to make arrangements for the carrying out of the work, and the parties shall immediately proceed to refer whatever issue exists to arbitration, one arbitrator to be appointed by the City, one to be appointed by the contractor, and a third to be selected by the two arbitrators. If earnest and bona fide effort at arbitration fails to resolve said issue, then after a period of seven (7) days and after either party shall have first appointed its arbitrator and shall have so notified the other party, either party may proceed to legal determination of said issue, including determination as to breach of contract, termination of contract, and loss, damage or other rights or remedies to which such party may be legally entitled." (Emphasis added.)

The City argues that the parties intended to provide a method for getting an "outsider's opinion" on a disputed issue, but that if that opinion proved to be unacceptable to either party to the contract, I. e. "if earnest and bona fide effort at arbitration fails to resolve said issue," each party had the right to bring a suit on the contract.

Stradinger contends, on the other hand, that the phrase "if earnest and bona fide effort at arbitration fails to resolve said issue" refers not to the situation in which one or both parties disagree with the arbitrators' findings and award, but rather to the situation in which the arbitration process breaks down before the arbitrators make an award.

Because arbitration is basically contractual, the controversy centers on the interpretation of the above quoted contractual language. The established rule is that the objective in interpreting and construing a contract is to ascertain the true intention of the parties.

In the case at bar, the trial court concluded that it "is clear from the record that the parties agreed to binding arbitration" governed by Ch. 298, Stats.

This court recently restated the scope of review of a trial court's construction of disputed language:

"The construction of a written contract is normally a matter of law for the court, although in a case of ambiguity in a written contract where words or terms are to be construed by extrinsic evidence, then the question is one for the trier of fact. RTE Corp. v. Maryland Casualty Co., 74 Wis.2d 614, 621, 247 N.W.2d 171 (1976). The contract is to be considered as a whole in order to give each of its provisions the meaning intended by the parties. Ketay v. Gorenstein, 261 Wis. 332, 53 N.W.2d 6 (1952); State ex rel. Department of Agriculture & Markets v. Badger Dairy, Inc., 245 Wis. 229, 232, 14 N.W.2d 34 (1944). If the construction is a question of law it may be redetermined independently by this court on appeal. Zweck v. D P Way Corp., 70 Wis.2d 426, 435, 436, 234 N.W.2d 921 (1975). If the construction is a question for the trier of fact, this court will not disturb such finding unless it is contrary to the great weight and clear preponderance of the evidence. Baldwin v. Anderson, 40 Wis.2d 33, 41, 161 N.W.2d 553 (1968)." Pleasure Time, Inc. v. Kuss, 78 Wis.2d 373, 379, 254 N.W.2d 463, 467 (1977).

The first sentence of the contract uses the term arbitration. The word arbitration ordinarily is understood to refer to a proceeding voluntarily undertaken by parties who want a dispute determined on the merits of the case by an impartial decision maker of their choosing, which decision the parties agree to accept as final and binding. ⁵ The parties' use of the term arbitration in the contract implies an agreement to be bound by the outcome of the arbitration. Thus the first sentence of the arbitration clause, reasonably interpreted, means that the parties intended to settle certain disputes regarding the contract by means of a third party's final and binding decision outside of court.

However the City contends that the second sentence of the arbitration clause must be interpreted to mean that the arbitration was not intended by the parties to be binding. The second sentence provides that when "earnest and bona fide effort at arbitration fails to...