82 N.J. Eq. 246 | New York Court of Chancery | 1913
The bill in this cause is filed to set aside an award of arbitrators appointed under a contract between the complainant and defendant, which contract and the specifications provide for the preparation of a foundation, grading and paving in the new stock yards of the complainant situated at Communipaw, Jersey City, and are in the usual form for such improvements, con
The sixth mutual covenant binds the contractor to make any repairs, renewals or replacements made necessary at any time during one year from and after completion of the work because of or growing out of defective materials used or workmanship done, at its own expense, on demand by the complainant; but it was understood that any defect in the work due to any settlement which might take place in the paving because of a settlement of the ground upon which the paving was laid should not be considered defective workmanship. •
The seventh and eighth mutual covenants are as follows:
“Seventh. No certificate given or payment made under this contract, except the final certificate or final payment, shall be conclusive evidence of the performance of this contract, either wholly or in part, and no payanient shall be construed to be an acceptance of defective work or of improper materials.
“Eighth. In case of any disagreement or dispute between the contractor and the stock yards company respecting the true construction or meaning of any specification, map, profile or plan, the same shall be referred to and decided by the engineer, and his decision shall be final and conclusive ; but should any disagreement or dispute arise relating to the true performance of any covenant or agreement, or the true value of extra work, because of a written requisition under the third mutual covenant, then and in either of such cases such disagreement or dispute shall be referred to three arbitrators, one to be selected by each of the parties, and the third to be selected by the two selected by the parties, and the decision in writing by a majority shall be final. Each party hereto shall pay one-half of the expense of such reference.”
Under the title “Grading” the specifications provide that the then present surface of the area to be paved should be brought to an uniform grade conforming to a plane parallel and distant sufficiently below the established grade of the pavement, to allow
Under the title “Pavement” it is provided as follows:
“The proposed pavement shall consist of -selected blocks, laid so. as to form a fairly uniform level top; they shall be laid on a sand bed one inch thick; after the paving is completed, it shall be rammed to a uniform even surface, satisfactory to the engineer or his inspector, and after having been so rammed .it shall be immediately covered with a Portland cement grout consisting of one part Portland cement and two parts clean sharp sand. This shall be spread dry over the pavement, leaving a surplus of at least one-eighth inch to one-quarter inch in thickness. Water shall then be added, and with the aid of brooms this grout shall be swept over and all about on the paved surface until the joints and interstices between said blocks shall be completely filled. No blocks with badly broken faces will be'accepted.”
The specification also provide as follows;
“Sand. Sand shall be clean, hard, sharp and coarse, or a mixture of fine and coarse of an approved quality.
“Clean, sharp sand, free from loam, now on the premises may be used.”
Under the title “Engineer” it says that the said word “engineer” used in the specifications is understood to mean tlie engineer of the stock yards company, unless otherwise mentioned, or his duly-authorized agents limited by the particular duties entrusted to them.
The work thus contemplated by the contract and specifications was the bringing of the surface of tbe proposed way to a uniform subgrade, spreading thereon sand to a depth of one inch, aud ramming so as to produce a uniform surface, and filling in tbe joints and interstices between the blocks with a cement grout composed of one part Portland cement and -two parts clean, sharp sand. The apparent purpose of the grouting was not only to produce a surface from which the water would flow readily, preventing percolation between the joints, but also to form a binder between the blocks, which, when the grout thoroughly set, would so bind the pavement together as to form a- solid mass covering the whole area, to the end that the impact from travel would not be borne by a single block, but resisted by a wide area,
The work was proceeded with, and one intermediate payment made without the certificate of the engineer, which payment, however, did not constitute a waiver of the right to demand the production of the final certificate.
The defendant finished the work -on July 22d, 1909, and on the same day rendered a bill with what purported to be a final certificate of one J. E. Walker, written at the bottom of the bill or estimate of quantities, as follows:
“Work complete and satisfactory, June 22/09, O. K., J. E. Walker.”
The date “June 22/09,” it is conceded should have been “July 22/09.” This certificate is not the certificate provided by the agreement, which requires the certificate of the engineer. Walker was not the engineer, nor does it appear that he u as the inspector appointed by the engineer, but was merely an employe of the stock yards company, who, in the absence of the inspector, seems to have acted as overseer of the work.
About August 17th, 1909, the first use was made of the pavement and the complainant alleges that it broke up under the traffic, due to the failure to grout the joints and interstices between the blocks in accordance with the specifications, and refused to pay the balance of the contract price; whereupon the defendant here commenced its suit in the Hudson circuit court for the balance due upon the contract. To the declaration the complainant pleaded that an arbitration .under the eighth mutual covenant was a condition precedent to the bringing of suit, and that none was had; to this plea the defendant here demurred, and the court, in an opinion filed, overruled the demurrer, whereupon the- defendant here discontinued its suit and proceeded to arbitrate, each party selecting one arbitrator and they selecting a third, all of whom were engineers.
The arbitrators met and heard the parties. From the evidence offered it appears that the joints and interstices between the blocks were filled with sand before grouting; that the defendant
Before the arbitrators the complainant urged that, under the first clause of the eighth mutual covenant, the arbitrators were bound to accept the interpretation of the specifications as to grouting which was placed upon it by the engineer. The engineer testified that during the progress of the work he discovered that grouting was done over the pavement with the interstices filled with sand, and vigorously condemned the work, and the superintendent of the. defendant here agreed that it was bad construction and promised to rake out the sand from the interstices before grouting. This statement was denied by the superintendent. The issue thus presented was for the arbitrators to determine and they decided against the complainant’s contention.
The arbitrators, with one dissenting, found in favor of the defendant here on all points, and awarded tire full balance due upon the contract, with interest from July 22d, 1909, the date of the completion of the work.
After the publication of the award the defendant here sued the complainant in the Hudson circuit court upon the con tract, and offered in evidence the award. The trial judge directed a verdict for the defendant (this complainant). This judgment was reviewed by the court of errors and appeals, which court— Mr. Justice Garrison writing the opinion—reversed the judgment below and awarded a venire de novo. Uvalde Asphalt Co. v. Central Union Stock Yards Co., 86 Atl. Rep. 425, decided March 3d, 1913.
First. That the only matter properly submitted to arbitration under the eighth mutual clause of said contract was the true performance of such paving work according to the construction and meaning of the specification relating thereto, which had been passed upon and decided by the engineer, whose decision by the terms of said contract was made final and conclusive, and that the majority of the arbitrators exceeded the submission, and improperly' and wrongfully disregarded the decision so made by the engineer, and in violation of their duty under the clause of the contract providing for arbitration, and in excess of the submission to them, improperly awarded to the contractor the whole amount claimed to be due to it.
Second. That Mr, Morrison, one of the arbitrators who was selected by the Uvalde Asphalt Paving Company was at the time when he entered upon the performance of his duty as such arbitrator, prejudiced and partial, and undertook the performance of such duty not as a fair-minded trier of the facts, but as an advocate and partisan of the Uvalde Asphalt Paving Oompany, with his mind made up before tire taking of any testimony in favor of the party by whom he had been selected.
The first ground is based on the contention that under the portion of the eighth mutual covenant which reads as follows:
“In ease of any disagreement or dispute between tbe contractor and tbe stock yards company respecting the true construction or meaning of any specification, map, profile or plan, tbe same shall be referred to and decided by the engineer, and Ibis decision shall be final and conclusive,”
the decision need not necessarily be given during the progress of the work, but might with full and binding force be given after its completion.
Mr. Justice Garrison, in dealing with this clause, in the last-mentioned ease, says: "This provision refers to a difference of
'But counsel for the complainant, while conceding that the appellate court placed a construction upon the arbitration clause of the contract at variance with that now contended for, say, that as on the writ of error, the court could not consider the facts alleged in the bill which invoke the jurisdiction of the court of chancery, and did not finally construe the clause referring to the engineer the decision on disputes respecting the true construction of the specifications, maps and plans, the expressions in opinion of the appellate court on this subject, were therefore obiter. If the view of the complainant, above expressed, is conceded to be correct, what other construction could be placed on the clause ? Its language is very simple, and clearly indicates that the disagreement or dispute must arise, and the reference to and decision by the engineer be made during the progress of the work, and not after its completion. Of what value would such interpretation be after the completion of the work P The contractor was entitled to know, during its progress, the view of the engineer on this subject, so as to conform to his interpretation of the specifications. The engineer, who was the representative of the complainant, might conceal his construction, permit the contractor to do the work contrary to his concealed interpretation, and on completion, refuse to give a final certificate, on the ground that his interpretation of the specifications differed from that of the contractor. This would savor somewhat of fraud, and should not be tolerated. The contractor had a right to expect that the engineer would properly inspect the work during it progress, and if the engineer conceived that the contractor’s interpretation, as shown by the work being done, was at variance with his, it was his plain dirty to inform the contractor so that the work could be strictly done in accordance with his conception of the plans and specifications. Therefore, if this court felt at liberty to construe this clause independently of the decision of the court of errors and appeals, it would reach the
The complainant also makes a point on the finding of the award in favor of this defendant for the full amount, while also finding that the defendant only “substantially performed the contract,” and urges that such a finding did not warrant the allowance in full, but, on the contrary, there should have been an abatement in the allowance as requested by the complainant to the extent that the contract was not fully performed.
The language used is rather inapt to express the idea of full performance, viz., “performed the work specified in their contract with said Central Union Stock Yards Company, substantially in compliance with the specifications for such work.”
Taking the whole award into consideration, it is plain that the arbitrators meant by their language “full performance.” The only matter in dispute was the grouting. • The award determines—
■ Second. TJpon this pavement, so laid, was spread a coating of grout of cement and sand properly prepared and of materials satisfactory to the parties concerned and in compliance with the specifications above mentioned.
Third. After stating that the only objection raised regarding the work was the manner of grouting and that great stress was laid on the fact that before grouting the joints should have been raked out or cleaned of sand, the award says:
“This raking' out of joints was not called for in the specifications, and if not called for certainly was not contemplated, and under such specifications it was not compulsory upon the paving company to rake or clean the sand from such joints.”
Fourth. That there was no demand made during the progress of the work to rake or clean out the joints.
Fifth. There was no objection to the work until after completion.
Such a finding of facts by the arbitrators could lead to no other award than that of full performance.
To the ordinary mind the specifications as to grouting seem free from doubt. They provide for the complete filling of the joints and interstices with grout. “Joint” is defined in Funk & WagnalPs Standard Dictionary as follows: “In mechanical art—masonry—the permanent meeting surface of two bodies, as stones or bricks, held together by weight, cement, or otherwise.” “The place where the ends of two rails meet or nearly touch.” This definition indicates that the “joint” in paving blocks is the space between the side faces of the blocks brought together or nearly in touch.
A fair reading of these specifications in the light of what was sought to be accomplished would seem to lead one to believe that the parties intended that the joints and interstices were to be filled to the full depth with grout, thus binding the pavement in the solid mass above referred to so that no single block would bear the impact of travel, but through the concrete binder, the force of the impact would be distributed over a wide area. It
Assuming that a court would, in' construing this grouting clause, determine that its true meaning required the raking and cleaning out of the joints contrary to the view of the majority of the arbitrators, has it the power to do so in this case ?
In the case of Evans v. Middlesex County. 209 Mass. 474; 95 N. E. Rep. 897, the contract contained the standard clauses requiring the work to be done and the materials furnished under the direction of an engineer to be selected by the architect and to the satisfaction of the architect and engineer; and in ease the work and materials were unsatisfactory, the contractor, on being notified in writing, should remove the same and substitute materials satisfactory; that all work should be done to the satisfaction of the architect and engineer, who should be the sole judges of the fitness of the work and materials. The specifications required “Sectional Covering * * * Air Cell, Class A.” The auditor found that the air cell furnished complied with the specification, but the architect and engineer both ignorantly supposed that the only covering that would comply with the specifications was manufactured by a particular manufacturer. He did not find that the architect and engineer were corrupt, but acted through ignorance. The court said: “The architect, by the terms of the contract, was constituted an arbitrator by the parties to determine practical questions of performance that might arise during the progress of the construction. So long as he acted honestly and with reasonable efficiency his action was binding upon the parties.” The action of the architect was sustained, and in concluding, the court said: “Although the case appears to be one of great apparent hardship, to the plaintiffs, the governing rules of law make no other result possible upon tire exceptions.”
In the case of Norcross v. Wyman, 187 Mass. 25; 72 N. E. Rep. 347, the specification provided as follows: “The architects shall have the sole interpretation of their drawings and specifications, except as otherwise provided or specified. Their
The arbitrators on the submission were not bound to award on mere dry principles of law, but might do so according to the principles of equity and good conscience (Ruckman v. Ransom, 23 N. J. Eq. (8 C. E. Gr.) 118, 120), and this is what the arbitrators in this case stated their purpose to be prior to hearing evidence.
The conclusion, therefore, on the first point is that the award was not in excess of the submission, and must stand, unless the arbitrators, or some of them, were guilty of fraud, corruption or partiality.
The second point urged for setting aside the award is partiality exhibited by the arbitrator Morrison, who was selected by the defendant. Mr. Owen, the arbitrator who dissented from the award and who was selected by the complainant, says in his affidavit, annexed to the amended bill, that after Morrison and he had agreed upon the choice of Mr. Olney as the third arbitrator, Mr. Morrison stated to him, Owen, that he, Morrison,
The suggestion attributed to Mr. Morrison by Mr. Owen that he, Morrison, should act as the representative of the defendant, and that Owen should perform the same function for the complainant is not at all unlikely, as it might be considered by them that the umpire, as the impartial arbiter between the parties, would control the award. In Fox v. Hazelton, 10 Pick. 275, Chief-Justice Shaw said: “It is not infrequent in practice for each party to select a friend known to have formed and expressed opinions upon the subject and preferences for the parties respectively, trusting that these opposite prejudices will balance each other, especially with the aid of an impartial umpire.”
The burden of proof, however, is on the complainant to prove partiality, as every intendment favors the validity of the award and the impartiality of the arbitrators. Therefore, the facts alleged by Mr. Owen, and denied by Mr. Morrison, cannot aid the complainant unless supported by additional proofs. These proofs, if any, are found in the minutes of the hearing before the arbitrators, and may be examined in aid of the inquiry into the question of partiality. Goodman v. Sayers, 2 Jac. & W. 250.
In Brown v. Brown, 1 Vern. 157, the umpire said he “was so well satisfied as to the value of the repairs that the plaintiff might bring what witnesses he would, he should not believe them. He had viewed the repairs himself.” The award was, nevertheless, sustained
Luring the proceedings Mr. Moore, the counsel of the complainant, commented strongly on this supposed partiality while Mr. Morrison was examining Mr. Levy. Mr. Morrison had asked Mr. Levy a question, and Mr. Levy, at the foot of his
“Mr. Moore—Are we getting the opinion of three fair-minded, unbiased men, or of two arbitrators and an advocate for the paving company? These questions all point to a mind already made up, Mr. Morrison.
“Mr. Morrison—You are entirely mistaken. X tried to bring out the facts.
“Mr. Moore'—We are entitled to the opinion of three unbiased men—anything that brings out the facts that bear upon this case.
“Mr. Morrison—What I am after is the impossibility of getting a good job under this specification and on that fill. I am talking of blocks of irregular depth—getting the blocks to one depth and having a concrete foundation under them.”
At this state of the hearing it is apparent that Mr. Moore was of the view that one arbitrator was partial; but it does not appear that at any time prior to the publication of the award the complainant had knowledge of the conversations set out in Mr. Owen’s affidavit between Messrs. Morrison and Owen. If it had, it should have acted then, and not have speculated on a favorable award, and, losing, seek to impeach it. Fox v. Hazelton, supra; Ormes v. Beadel, 30 L. J. Ch. 1; 45 Eng. Rep. Full Reprint 649.
It seems unreasonable that Mr. Morrison would have acted as he did unless he understood that he was to bring out the matter on the part of the defendant, and that Mr. Owen was to do the same on the part of the complainant. In saying this, I do not find that the arbitrator intended to do "wrong; and, possibly, in conference with his fellow arbitrators after the case was closed, the matter received his impartial consideration, and the result, especially when agreed to by the umpire, against whom no charge has been made,' was just and equitable.
If Mr. Morrison, because of his appointment by the defendant, or for any other reason, considered himself, as the representative or agent of the party appointing him, and in the arbitration proceedings acted on such belief, and his judgment was influenced by that fact, the award should be set aside (Strong v. Strong, 9
In Strong v. Strong, supra, it appeared that the plaintiff talked privately with one of the arbitrators before the award was made, and there was evidence tending to show that this arbitrator was influenced by the consideration that he was selected by the plaintiff and felt himself rather committed as the plaintiff’s man. The action was in debt, on bond to perform the award. The judgment below was for the plaintiff upon the rulings of the trial judge. The verdict was set aside, to be tried by a jury on the sole question of the partiality or misconduct of the arbitrator. In this case the court said: “But if parties really intend to have their rights decided by impartial judges, they are entitled to insist that .each and all of them be impartial. Therefore, proof of bias and strong partiality on the part of an arbitrator would form a serious objection to the acceptance of an award. It would be no valid answer to the objection that such referee did not discover undue partiality in the deliberations of the referees, and made no unusual exertion to influence their minds, because it is impossible to determine to what extent their judgment might have reposed on his reasonings and suggestions, oi how far their decisions were influenced by him.” The case was retried, and the verdict of the jury was for the plaintiff. This latter verdict was considered in Strong v. Strong, 12 Gush. 185, and the verdict was sustained, the court saying: “It was reprehensible for the plaintiff to talk privately to the arbitrator, before the award was made, on the matter? in controversy with his father which the arbitrators were judicially to act upon. But we are not disposed to say that this circumstance alone, against any and all counteracting evidence, is sufficient to support proof of culpable partiality to set aside the unanimous award of five arbitrators.”
In Moseley v. Simpson, L. R. 16 Eq. 226, it appeared that a very bitter feeling existed between the parties. Well knowing
The above eases, however, deal with misconduct where no charge of partiality is made excepting as it might arise out of the misconduct, -in which ease the character of the misconduct, and the degree that it influenced the mind of the arbitrator, might very properly be inquired into to determine whether or not the misconduct affected him or his associates in making the award. In this case, however, if Mr. Owen’s story is true, the arbitrator entered into the performance of his duty ignorantly believing .that he had a right to act on behalf of the paity appointing him. If this was his mental condition, he was not guilty of intentional misconduct, but of such partiality as disqualified him from sitting in the board of arbitrators.
No case in New Jersey is cited by counsel on either side where a court of equity was asked to set aside an award of arbitrators for partiality. The case must, therefore, be decided in the light of adjudged cases of other courts.
It is urged that Mr. Owen cannot testify against the award.
In Campbell v. Western, 3 Paige 124, 137, the chancellor said: “An arbitrator who has signed an award with his co-arbitrators
These cases are not applicable, because Mr. Owen is not seeking to impeach his award. It was not his. He did not join in making it, but dissented therefrom. His testimony is, therefore, admissible. National Bank of Republic v. Darragh, 30 Hun 29; Levine v. Lancashire Insurance Co., 66 Minn. 138; 68 N. W. Rep. 855.
The case of the complainant is rather stronger than those where the award is attempted to be set aside on the evidence of an arbitrator who testifies to misconduct or partiality exhibited in the conferences of the arbitrators, because here the testimony of the arbitrator is not as to what transpired in the proceedings before the arbitrators and in their conferences, but to the point that one arbitrator, before any hearing -was had, declared his misconception of his obligation which, if carried out, would have been fatal to the award. The rest of his affidavit was offered to furnish the evidence that the arbitrator acted in accordance with his communicated view (Goodman v. Sayres, supra), and all the testimony before the arbitrators is in evidence under an affidavit on the part of the defendant.
The case made on the amended bill and affidavits, in view of the counter affidavits, is not free from doubt. If, by reason of partiality, the majority of the arbitrators construed the grouting clause unfavorably to the complainant’s contention, a serious wrong may have been inflicted. It is not sufficient for the defendant to show that it was not asked to make repairs, renewals or replacements under the sixth mutual covenant above set forth, during the first year, and that covering a period of three and a half years since the work was done only several hundred dollars were expended by the complainant in repairs. It is not charged that the work was not well done if the defendant was not re
.Tt is, therefore, important that an investigation into the question of partiality should be made, which might, in view of the facts, result in the setting aside of the award, with a resubmission.
To refuse the preliminary injunction would leave the complainant defenseless at law. To grant the injunction would protect its interest, and, when allowed on proper terms, the interests of the defendant can be properly safeguarded, and perhaps such a course will result in a more speedy determination of the issues involved, and reduce the litigation from two suits, one at law and one in equity (both of which might be removed to the court of errors and appeals for review, at great expense to the parties), to one in equity, where the case can more readily be disposed of; and if, in that disposition it is' determined that the award is valid, the case of the complainant is at an end.
1 have, therefore, concluded to advise that a preliminary injunction issue- restraining the defendant from offering said award in evidence in any suit at law against the complainant, or from suing the complainant on the award at law, until the further order of this court, upon substantially the following terms:
The complainant shall—
First. Pay to the defendant the sum which, before the arbitrators, it tendered itself ready to pay, namely, $4,906.60, made up as follows:
Balance unpaid on contract............... $8,900 00
Allowance claimed by complainant for defective performance of contract............. 4,000 00
$4,900 GO
to which sum interest thereon shall be added.
Third. Consent to a hearing on the order for injunction at the next term of the court of errors and appeals, if the defendant so desires.
Said payments to be made and bond given in such manner as not to prejudice the rights of the parties.
