Trustees of Boston & Maine Corp. v. Massachusetts Bay Transp. Authority

• Decision Date: 04 January 1973
• Citation: 363 Mass. 386,294 N.E.2d 340
• Parties: TRUSTEES OF the BOSTON AND MAINE CORPORATION, Debtor, v. MASSACHUSETTS BAY TRANSPORTATION AUTHORITY. . Arged
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 340

294 N.E.2d 340

363 Mass. 386

TRUSTEES OF the BOSTON AND MAINE CORPORATION, Debtor, v. MASSACHUSETTS BAY TRANSPORTATION AUTHORITY.

Supreme Judicial Court of Massachusetts, Suffolk.

Arged Jan. 4, 1973.

Decided March 29, 1973.

Joseph H. Elcock, Jr., Boston (Ronald G. Busconi, with him), for Massachusetts Bay Transportation Authority.

Edward I. Masterman, Boston (Andrew C. Culbert, Boston, with him), for Trustees of the Boston and Maine Corp.

Before TAURO, C.J., and QUIRICO, BRAUCHER, HENNESSEY and WILKINS, JJ.

WILKINS, Justice.

In 1964 the Boston and Maine Corporation (B & M) and the Massachusetts Bay Transportation Authority (MBTA), established pursuant to G.L. c. 161A, entered into an agreement (Agreement) concerning the continuation of passenger service on and over B & M lines within the territory of the MBTA. In that agreement the B & M granted an option to the MBTA, subject to certain conditions, to lease or purchase any right of way of the B & M within the Commonwealth which was to be used by the B & M for the provision of passenger service for the MBTA under the Agreement. Among those lines was the 'Reading Branch Line' running almost seventeen miles from Boston to Wilmington Junction. The Agreement provided that the notice of exercise of any option should 'state the price which the (MBTA) is willing to pay to . . . (B & M) for the . . . purchase of any said right-of-way.' If the B & M objected to the price, it was required to 'submit the issue of the price therefor, which shall be determined as the fair market value of the property as a unit limited to its use solely for transportation purposes, to arbitration in the manner hereinbelow provided.' Subsection C(1) of par. 11 of the Agreement provided that if the MBTA should exercise an option to purchase a right of way, '(a) dequate provision shall be made in the exercise of any said option to purchase for the permanent availability by easement or otherwise, of any or all of said rights-of-way for the continued operation of the present and reasonably forseeable (sic) expanded freight service by . . . (B & M), jointly with the . . . (MBTA), but under the traffic control of the . . . (MBTA).'

In August, 1968, certain amendments, which are significant for the purposes of this proceeding, were made in the Agreement. The provision quoted above concerning arbitration of the issue of the price of any right of way was modified insignificantly (e.g., by the deletion of a comma) and further language was adopted concerning arbitration. That further language provided, among other things, that the arbitrator should conduct the arbitration in accordance with G.L. c. 251 and that his determination and award 'shall be final and binding upon the parties and shall be a complete bar to any claims or demands in favor of either party against the other.'

The August, 1968, amendment also provided that the language of subsec. C(1) of par. 11 of the Agreement, quoted in part above, 'was intended to and does provide for payment to the . . . (B & M) for any damages resulting in economic losses suffered by the railroad in the form of reduced freight revenues and increased costs of operation of freight services resulting from the exercise of the option granted . . . to the . . . (MBTA).'

On August 21, 1969, the MBTA exercised its option to purchase the Reading line from the Cambridge Street bridge in Boston to Wilmington Junction. The MBTA offered to pay the sum of $4,000,000. In the letter exercising the option the MBTA stated that 'it is . . . understood' that the amount offered 'includes payment for any damages resulting from economic losses suffered by the railroad in the form of reduced freight revenues and increased cost of operation of freight services resulting from the exercise of the option granted in accordance with . . . (the language of the August, 1968, amendment quoted in the previous paragraph).'

Four days later the B & M invoked the arbitration provisions of the Agreement, as amended, stating that the matters in controversy were the price which the MBTA should pay and 'adequate provision for the permanent availability, by easement or otherwise, of said, reading Line for the continued operation of the present and reasonably foreseeable expanded freight service by . . . (B & M).' ¹

The arbitrator was selected. Hearings commenced in March, 1970. After seventy-three hearing days, during which twenty-six witnesses were heard, 104 exhibits were introduced and more than 4,300 pages of testimony were transcribed, final arguments were heard and briefs were submitted in June, 1971. On August 30, 1971, the arbitrator submitted his findings and award. He found that the 'fair market value for the land and physical property' was $15,909,866. He further found that 'the permanent economic damages to be suffered by the . . . (B & M) if the Interstate Commerce Commission permits the abandonment of freight service between . . . (a point in Medford and a point in Melrose) to be $2,147,000, which award is to be held in abeyance and made contingent upon the action of the Interstate Commerce Commission.' The arbitrator found that if such freight service is not abandoned, the B & M should 'repay to the . . . (MBTA) for the permanent easement, which must run if favor of the . . . (B & M), the sum of $278,230.'

On September 16, 1971, the MBTA applied to the arbitrator for modification and correction of the award, stating among the grounds for the application that '(t)he award is not in conformity with the submission of the issue' and that '(t)here are evident miscalculations of figures and evident mistakes in the description of things and properties.'

On September 22, 1971, the B & M petitioned in the Superior Court for confirmation of the arbitrator's award. On November 1, 1971, the arbitrator submitted a modification and correction of his original award, reducing the principal amount by approximately $18,000 to $15,891,896. On November 29, 1971, the B & M moved to amend its petition to confirm the arbitrator's award so as to include the arbitrator's modification and correction. On January 5, 1972, within ninety days of the submission of the arbitrator's modification and correction of his original award, but not within ninety days of the submission of that original award, the MBTA filed (in the pending proceeding to confirm the award as modified) an application to vacate or, in the alternative, to modify the arbitrator's award.

The judge allowed the petition of the B & M for confirmation of the award, as modified by the arbitrator, and denied the application of the MBTA to vacate or modify that award. The MBTA thereupon excepted to the actions of the judge and claimed an appeal from his order confirming the award. All questions sought to be raised are open on the exceptions; there is no need to consider the appeal. G.L. Rugo & Sons, Inc. v. Lexington, 338 Mass. 746, 748, 157 N.E.2d 521; Fazio v. Employers' Liab. Assur. Corp. Ltd., 347 Mass. 254, 258, 197 N.E.2d 598.

Of the grounds stated in G.L. c. 251, § 12, upon which a court may vacate an award, the MBTA relied on only one, namely, that the arbitrator exceeded his powers. In seeking, as a second alternative, a modification or correction of the award, the MBTA relied on the ground, stated in G.L. c. 251, § 13(a), as appearing in St.1960, c. 374, § 1, that the arbitrator 'awarded upon a matter not submitted to . . . (him) and the award may be corrected without affecting the merits of the decision upon the issues submitted.' In each instance the MBTA is contesting the action of the arbitrator on the ground that he acted in excess of the authority conferred on him, a question which is always open for judicial review. See M. S. Kelliher Co. v. Wakefield, 346 Mass. 645, 647, 195 N.E.2d 330.

Our decisions have plainly indicated, however, the narrow scope of judicial review available when a matter submitted to arbitration has been decided. If an arbitrator has committed an error of law or fact in arriving at his decision, a court will not upset the finding unless there is fraud involved. Glenn Acres, Inc. v. Cliffwood Corp., 353 Mass. 150, 155, 228 N.E.2d 835. Even a grossly erroneous decision is binding in the absence of fraud. See MCGOVERN V. MIDDLESEX MUT. INS. CO., MASS., 269 N.E.2D 445.^A There is no requirement in G.L. c. 251 (the Uniform Arbitration Act for Commercial Disputes) that the arbitrator give a statement of reasons for his decision, setting forth findings of fact and conclusions of law. Fazio v. Employer's liab. Assur. Corp. Ltd., 347 Mass. 254, 258, 197 N.E.2d 598. Where the parties have 'received what they agreed to take, the honest judgment of the arbitrator as to a matter referred to him' (Phaneuf v. Corey, 190 Mass. 237, 247, 76 N.E. 718, 719), the law is clear that the award is binding, and thus free from judicial interference, in the absence of fraud. Carter, Moore & Co. Inc. v. Conahue, 345 Mass. 672, 676, 189 N.E.2d 217; Cf. GREENE V. MARI & SONS FLOORING CO. INC., MASS., 289 N.E.2D 860^B.

We turn then to each objection of the MBTA to the arbitrator's action to determine whether it deals merely with an asserted error of law or fact (with which a court may not interfere in the absence of fraud), or whether it deals with action by the arbittrator which, because it is beyond the scope of the subject submitted to him...