Wheeling Gas Co. v. The City Ok Wheeling

• Decision Date: 31 July 1872
• Citation: 5 W.Va. 448
• Court: West Virginia Supreme Court
• Parties: Wheeling Gas Co. v. The City ok Wheeling.

5 W.Va. 448

Wheeling Gas Co.

v.The City ok Wheeling.

Supreme Court of Appeals of West Virginia.

July Term. 1872.

1. Courts of equity have always had and exercised jurisdiction to interfere to set aside awards for fraud, accident, partiality, misconduct or mistake of the arbitrators. This power is even reserved to them in the statute providing for submissions on the record.

2. It is not matter sufficient to set aside an award for misconduct on the part of an arbitrator, that the arbitrator, prior to ids appointment, had expressed, an opinion as to the merits of the controversy, provided the party selecting him was nor aware of such expression of opinion.

3. Arbitrators are calbed upon to execute a joint trust and ought to look impartially at the true merits of the matter submitted to their judgment, without reference te the manner in which the charge has been placed upon them. In no case can they become an advocate, nor act as agent, for the party appointing them.

4. A charge in a bill that one of the arbitrators acted as the "adviser and partisan" of the party appointing or selecting: him, is a sufficient charge of partiality and misconduct, to give a court of equity jurisdiction of a case asking to set aside an award.

5.It is not alone the fact, but the aspect of perfect fairness, which must be preserved, and an arbitrator cannot be too careful as to his conduct, holding this end in view. It is not a conscientious intent to be honest, on the part of the arbitrator, nor his conviction that he is so, that can suffice. It is his external actions that will be subjected to scrutiny, and if these do not satisfactorily bear the test the award will fall.

6. There may be ample misconduct, in a legal sense, to make the court set aside an award, even where there is no ground tor imparting the slightest improper motives to the arbi trators.

7. Where an arbitrator attended mainly to the interests of the party appointing him, in collecting up and arranging testimony, procuring the attendance of Witnesses and examining and cross-examining them, it is sufficient evidence of legal misconduct to set aside the award.

8. Parties who really intend to have their rights decided by impartial judges are entitled to insist that, all of the arbitrators shall be impartial. But if they are content to submit questions in controversy to those who are known to have formed and expressed opinions upon the subject matter, or who are known to have partialities and prejudices for or against the respective parties, an award made by such arbitrators is binding.

9. Under such circumstances, a gas company, who selected one of its stockholders as an arbitrator, who with the arbitrator selected by the other party chose an umpire, ought not to be heard to impeach an award. Especially as the testimony discloses that the amount of the award seems to be fair.

10. Where a submission is not made under the statute, and the award is signed by but two of the arbitrators, the court cannot determine its sufficiency or insufficiency for want of jurisdiction.

The facts in this case are, substantially, that the Wheeling Gas Companv was a corporation created by act of the General Assembly of Virginia, with the privilege to construct and maintain gas works in the city of Wheeling, and such privilege was exclusive for the space of thirty years; Provided, that at the expiration of twenty years from the date of its commencement, and within six months thereafter, the city of Wheeling should have the right at the diseretion of the council thereof, to purchase the grounds, works, fixtures and property of the company, at such terms as could be agreed upon between the company and the council, or at the price and on the terms to be fixed by the award of three persons to be chosen as follows: the first by the company, the second by the city, and the third by the two thus chosen. And in making up the award the arbitrators were to have regard to the then actual value in money of such grounds, works, &c, and should not take into consideration the value of the franchises of the charter, or the dividends or profits accruing to the stockholders.

The company organized under this act and began to supply gas on the first day of January, 1851.

On the 3d of January, 1871, the council notified the company of the purpose of the city authorities to buy the grounds, works, &c, at the price and upon the terms to b? ascertained by an award, having previously endeavored to negotiate for the same. The company nominated Beverly M. Eoff as its arbitrator, the city nominated John McLure, and they selected Robert B. Woods, These parties proceeded to discharge the duties imposed upon them, and on the 29th of May, 1871, McLure and Woods made an award, Eoff dissenting therefrom, ascertaining the price and value of the company's property to be seventy-three thousand six hundred and thirty-seven dollars and fifty cents, and that the city should become the purchaser upon the payment of that sum before the 30th of June following. On the 1st day of June, 1871, the city, through its officers, tendered to the company the sum mentioned in the award, which was refused, of which refusal the company gave formal notice on the 12th following.

The city through its Mayor and policemen took forcible possession of the works on the 2d of June, the day after its tender, and continued to operate them.

On the 18th of July, 1871, the company filed its bill in the circuit court of Ohio county, alleging that by reason of misconduct on the part of McLure, one of the arbitrators the award was null and void, and prayed that the city and its agents be enjoined and restrained from operating and interfering with the company's works, and be required to account for rates received, &c. The company had previously instituted an action of unlawful detainer against the city, which was pending when the injunction was granted. Answers were filed to the bill and depositions taken and the cause was finally heard on the 12th of March, 1872, when the injunction was dissolved and the bill dismissed.

The misconduct on the part of the arbitrator, McLure, was alleged to be that he had formed and expressed an opinion as to the value of the company's property before his appointment as arbitrator, and therefore was incompetent. Also that throughout the investigation of the arbitrators, he acted as the adviser and partisan of the city in the procurement of testimony and examination of witnesses; the expression of his opinion as to the value of different portions of the company's property and in his declaration of unwillingness to believe the opinions of the company's witnesses as to the value of the property, before the witnesses were sworn.

The testimony in relation to this subject, which was the only matter considered in this court, will be found in the opinion of Maxwell J.

The plaintiff appealed from the decree dismissing the bill.

Wheat, Lamb and Pendleton for the appellant.

Messrs. Lamb and Paull, for the appellants, having examined the evidence in relation to the manner in which the arbitration was conducted, proceeded to consider the principles of law applicable to the question, as follows:

The misbehavior or partiality of an arbitrator cannot be pleaded, or given in evidence, in defence of an action at law to enforce an award, 2 Sto. Eq. § 1452; 1 Wms. Saund. 327, a. note 3; Morse on Arbitration, 595, 596; Russell's Arbitrator, in Vol. 63 of Law Library, 509-511, marginal paging. The appropriate remedy in such cases is in equity. "Courts of equity," says Story, "will in all such cases grant relief, and upon due proofs, set aside the award. 2 Sto. Eq. § 1452; Morse on Arbitration, p. 595, 596; Sisk vs. Garey, 27 Md. 401; Shinnie vs, Coil, 1 McCord's Ch. R. 478; Cleland vs. Hedley, 5 Rhode Island 163; Russ. Arh. Chap. 9, Sect. 1, p. 614, and Chap. 11, Sect. 1, p. 666. By the Statute, however, (Cods of West Va. Ch. 108, p. 569; Code of Va. 1860, Ch. 153, p. 656,) if parties submit any controversy to arbitration, and agree that such submission may be entered of record in any court, the award in such case may be set aside on motion, for errors apparent on its face, or where it appears to have been procured by corruption, mistake or other undue means, or that there was partiality or misbehavior, in the arbitrators or any of them; but it is expressly declared that this provision shall not be construed to take away the power of courts of equity over awards.

Partiality or misbehavior in the arbitrators; or any of them, is therefore in equity good cause for setting aside an award; and we think both have been clearly shown in the present case. Having, however, already discussed and attempted to explain the facts, we propose here only to state the rules of the law, which, we think, ought to govern the case, supposing that their application will be sufficiently obvious.

"It is a common practice for the submission to provide that the plaintiff and defendant shall each appoint an arbitrator. The arbitrators so selected are not to consider themselves the agents or advocates of the party who appoints them. When once nominated, they are to perform the duty of deciding impartially between the parties, and they will be looked upon as acting corruptly if they act as agents, or take instructions from either side." Rus. Arb. Ch. 4, Sect. 3, p. 206-207.

In Calcraft vs. Roebuck, 1 Ves. Jr. 227, it was said by Lord Thurlow, that an arbitrator should be indifferent; for by con- sidering himself as the agent of the person appointing himr he acts against good faith and breaks a most solemn engagement. (See also 9 Gushing 572.)

In Morse on Arbitration, page 106, it is said; "A single arbitrator, agreed upon by both disputants, is not likely to forget that he is to be an impartial judge. But where each party nominates an arbitrator, the nominee may sometimes be tempted to regard himself as specially bound to protect the interests of his appointer. The notion, however,...