In re Patterson-MacDonald Shipbuilding Co.

284 F. 277 | W.D. Wash. | 1922

NETERER, District Judge

(after stating the facts as above).

The primary question is: Did the master have the right to receive the awards of the arbitrators? The contracting parties had a right, on entering into the contract, to provide a mode and method by which disputes arising in carrying forward the contract should be settled. However parties are not permitted on the ground of public policy to close access to the courts, but may, as a condition precedent to application to the courts, agree to a mode of settlement out of court, and .where such proceeding is provided then a party' must offer, it has-been held, to have the matter- concluded in accordance with such stipulations before invoking the court’s jurisdiction. It is fundamental that the laws of the place upon the subject of the contract are read' into and become a part thereof to the same extent as though they were written into its terms. Armour Packing Co. v. U. S., 153 Fed. 1, 82 C. C. A. 135, 14 L. R. A. (N. S.) 400; McCracken v. Hayward, 2 How. 608, 11 L. Ed. 397; U. S. v. New Orleans (C. C.) 17 Fed. 483. Under the law of Washington, common-law arbitration does not exist in the state of Washington. Dickie Mfg. Co. v. Sound Const. & Eng. Co., 92 Wash. 316, 159 Pac. 129. Sections 420-430, Rem. & Bal. Code of Wash., provide for arbitration under agreement made in writing signed by both parties, and provide a procedure to final judgment in the superior court of the state, “as upon the verdict of a jury,” and it is. therefore plain that the laws of Washington are vital to a final conclusion.

The arbitration tribunal under the statute of Washington had relation to the courts of the state (Dickie Mfg. Co. v. Sound C. & E. Co., supra), and the trustee in bankruptcy was powerless to submit to arbitration an issue in the state court, within the jurisdiction of this court, except as directed by this court. If the stipulations in the contract are treated as a submission to arbitration, and for that reason was a contract by the parties (District of Columbia v. Bailey, 171 U. S. 161, 18 Sup. Ct. 868, 43 L. Ed. 118), it is equally plain that the laws of Washington (sections 420-430, supra) became a part of it. This has relation to the courts of the state. The arbitration board, if it had a legal status, was an arm or agency of the state court, unless it can be sustained under section-26, Bankruptcy Act (Comp. St. § 9610), and General Order 33. The liquidation is in the Bankruptcy proceeding, and upon stipulation the court directed the manner of liquidation and appointed a special master. The appointment of the special master to liquidate the claim is not a plenary proceeding as contended for by the trustee. ' The jurisdiction of the bankruptcy court with relation to the issue is exclusive. U. S. Fidelity Co. v. Bray, 225 U. S. 205, at page 217; 32 Sup. Ct. 620, 56 L. Ed. 1055; Id., 170 Fed. 689, 96 C. C. A. 9. At the inception of this issue under the circumstances the matter could well have been presented to the court in a summary way for direction with relation to the matter contended for. In re A. & W. Nesbitt, Ltd. (C. C. A.) 282 Fed. 265, 48 Am. Bankr. Rep. 514. Can the arbitration be sustained under the provisions of the Bankruptcy Act, § 26?

“The trustee may, pursuant to the direction of the court, submit to arbitration any controversy arising in the settlement of the estate.

“B. Three arbitrators shall be chosen by mutual consent or one by the trustee, one by the other party to the controversy, and the third by the two so chosen, or if they fail to agree within five days after appointment the court shall appoint the third arbitrator.

“0. The written findings of the arbitrators, or a majority of them, as to the issues presented may be filed in court and shall have like force and effect as a verdict of a jury.”

The arbitrators were appointed in harmony with the Bankruptcy Act, except for the formal direction of this court. The testimony was presented by both sides, arguments were made, the award filed, all things were had and done with relation to the issue as fully and freely as though a formal order had been entered by this court. It is true the claimant entered a formal objection and repeatedly objected to the limited arbitration, and made strenuous objections before the court as to the justness of the award by the arbitrators. The parties proceeding under the provisions of the contract to arbitrate cfonsumed 'much time, and entailed great expense. The arbitrators were marine men, well qualified to determine such an issue. None better could have been selected. The claimant, when it proceeded with the arbitration in harmony with the contract provisions and in harmony with section 26, supra, waived the objection theretofore made. The trustee could not have proceeded to an award without the claimant, and the claimant, having proceeded to an award, may not now take advantage of a previous objection. The authorities hold that the claimant should not be permitted to speculate on the result of an award and that having proceeded it is bound. 5 Corpus Juris, 56; Burchell v. Marsh, 58 U. S. (17 How.) 344, 15 L. Ed. 96; Martinsburg & P. R. R. Co. v. March, 114 U. S. 549, 5 Sup. Ct. 1035, 29 L. Ed. 255; Burrell v. U. S., 147 Fed. 44, 77 C. C. A. 308; Toledo S. S. Co. v. Zenith Trans. Co., 184 Fed. 391, 106 C. C. A. 501; Hewitt v. Lehigh & H. R. R. Co., 57 N. J. Eq. 511, 42 Atl. 325; Bingham v. Guthrie, 19 Pa. 418; Grant v. Nat. Bank of Auburn, 232 Fed. 201; Dickie Mfg. Co. v. Sound Const. & E. Co. supra; Williams & Branning Mfg. Co., 154 N. C. 205, 70 S. E. 290, 47 L. R. A. (N. S.) 337.

It appears in view of the stipulations in the contract and the selection of arbitrators by the respective parties that section 26, supra, and General Order 33 have been substantially complied with, and that the objection to the award_ is not well founded. The award is final, except for fraud or apparent arbitrary conduct (2 R. C. L. 386), and no fraud or arbitrary conduct is shown. The objection to the report with relation to the assessment of damages and findings with relation to the several parties appear to me to be right.