48 A.2d 447 | Md. | 1946
This suit in equity was brought by Doughnut Corporation of America, which operates a flour mill at Ellicott City, to correct an award made by the arbitrators of a claim against Continental Milling and Feed Company, purchaser of 48,754 tons of by-products of the mill.
The bill of complaint alleges that in 1932 complainant entered into a contract to sell all of its middlings and bran to defendant at the prices quoted in the Northwestern Miller, a weekly trade journal published in Minneapolis, less discount of $3 per ton; and that in 1937 it executed another contract effective August 1, 1937, reducing the discount to $2.25. The bill then alleges that in 1942, when prices were set by the Federal Government, its attention was called to the fact that the published quotations *673 had been substantially lower than the actual market prices, and following an investigation it was found that the quotations were between $3 and $4 per ton less than they should have been from January 1, 1935, to July 31, 1942; and the parties submitted the claim for underpayments to three arbitrators, A.E. Duncan, W.H. Marshall and L.I. Whiteford, chosen by the American Arbitration Association. According to complainant, the underpayments totaled $166,984.22, the difference between the erroneous quotations and the quotations for various milling centers appearing in theNorthwestern Miller, the Southwestern Miller, and other publications; but the arbitrators used only the quotations in theNorthwestern Miller for the City of Buffalo and added the freight per ton to Baltimore, and by this criterion found that the underpayments totaled $166,289.83; but after making that determination, the arbitrators unjustifiably reduced the amount of the award by deducting 50 cents per ton. The bill further alleges that the arbitrators, ignoring the period to be considered under the arbitration agreement, made an award for underpayments only from January 1, 1935, to August 31, 1937, on the theory that complainant was negligent in failing to compare the quotations in the Northwestern Miller with the market prices which prevailed in Baltimore from week to week; and that the arbitrators thereby reduced the award unlawfully to $44,328.15, which sum complainant refused to accept in full settlement of its claim. The bill finally alleges that the arbitrators further exceeded their authority by declaring that there was no evidence that defendant or any of its officers, directors, or employees had attempted or conspired to defraud complainant. The bill prays the Court to set aside those parts of the award which were not authorized by the arbitration agreement, and to decree that defendant owes complainant for the entire amount of underpayments in the period beginning January 1, 1935, and ending July 31, 1942.
Defendant demurred to the bill on the ground that the award is valid and conclusive. The chancellor held (1) *674 that the criterion used by the arbitrators for determining the market prices in Baltimore was valid, (2) that their refusal to make an award for underpayments in the period from August 31, 1937, to July 31, 1942, was invalid, (3) that the decision that there was no attempt or conspiracy to commit fraud was invalid, and (4) that the valid parts of the award can be separated from the invalid parts. Defendant is appealing from the chancellor's order overruling the demurrer.
It is a fundamental principle that where the parties to a dispute decide of their own accord to submit their dispute to arbitration without restriction or condition, the award on the subject matter, in the absence of fraud or mistake, is binding and conclusive upon the parties. J.F. Fitzgerald ConstructionCo. v. Southbridge Water Supply Co.,
When, however, we come to the decision of the arbitrators to reject the claim for underpayments in the period from August 31, 1937, to July 31, 1942, we have an entirely different situation. In order that an award shall be binding, the arbitrators must follow exactly the authority given them by the agreement of the parties. If they exceed their authority, the award is void to that extent. In a case in New York Chief Judge Cardozo said of arbitration: "The question is one of intention, to be ascertained by the same tests that are applied to contracts generally. * * * No one is under a duty to resort to these conventional tribunals, however helpful their processes, except to the extent that he has signified his willingness. Our own favor or disfavor of the cause of arbitration is not to count as a factor in the appraisal of the thought of others." Marchant v. Mead-Morrison Mfg. Co., *676
In this case the parties submitted only one issue to arbitration by their agreement dated January 18, 1944. Doughnut Corporation of America claimed that it had been underpaid because the quotations from January 1, 1935, to July 31, 1942, were erroneous; Continental Milling and Feed Company claimed that it had paid fully for all millfeeds delivered during that entire period. Defendant contends that complainant was estopped from recovering any underpayments under the second contract. It is argued that in June, 1937, complainant's vice president was told that the quotations were possibly incorrect and he then corresponded with the Northwestern Miller on the subject, and the arbitrators took the view that the vice president should have investigated this suggestion thoroughly, and, if he had done so, defendant could have charged its customers higher prices. However, it must not be overlooked that actual or constructive fraud is an essential ingredient of equitable estoppel. An equitable estoppel is the effect of voluntary conduct of a person whereby he is absolutely precluded, both at law and in equity, from asserting rights which otherwise might have existed as against another, who has relied in good faith upon such conduct and has been led thereby to change his position for worse, and who acquires on his part some corresponding right. Pearre v.Grossnickle,
The law is established that where arbitrators exceed there authority and include in their award matter beyond the submission, and the part which is void cannot be separated from the remainder without injustice, the whole award is void.Bullock v. Bergman,
Order affirmed and cause remanded, with cost.