In re the Arbitration Between Burke & Corn

102 N.Y.S. 785 | N.Y. App. Div. | 1907

Lead Opinion

Houghton, J.:

The -appellant Corn was the owner and the respondent Burke the contractor for the erection of a building. Controversies' having arisen as to the amount due The contractor under his contract and for extra'work, and as to the amount which should be deducted therefrom in favor of the owner, the parties entered into a written agreement to arbitrate their differences before'a single arbitrator agreed upon with the further stipulation that his decision should.be final and that judgment might be entered thereon. The particular form .of'submission reads as follows: “That the parties hereto do -hereby pursuant to Chapter 17, Title 8 of the Code of Civil Procedure submit all and all manner of actions, cause and causes of actions, suits, controversies,, claims and demands whatsoever now pending and existing by and between them,” respecting the amount due from the owner to the contractor under the contract and for 'extra work, and the amount due from the contractor to the owner respecting various claims, made, by him arising out of such contract or in connection with alterations on the building or to such contract.

After hearing the evidence adduced by the parties.and the,proofs submitted by them, the arbitrator made an award as follows; “ That there is due to Luke A. Burke from Henry Corn on account, of the matters and things set forth in the said agreement of arbitration, after making deductions, and allowances in favor of said Henry. Corn from the amount claimed by said Luke A. Burke, the sum of Forty-five thousand three hundred eighty-seven and 18/100 dollars ($45,387.18)) with interest thereon from June 1, 1904, being the sum of Five thousand nine hundred and 33/100 dollars ($5,900.33), amounting- in the aggregate to the sum of Fifty-one thousand two hundred eighty seven and 51/100 dollars ($51,287.51).”

The appellant paid the principal suin awarded but refused to pay the amount allowed as interest, and moved that the award he modified by striking the same tliereform, which motion was denied and the award confirmed and judgment directed to be entered for the unpaid balance, and from such disposition of" the matter this appeal is taken.

The appellant insists, first, that the matter of interest was not within the submission of arbitration, and, second, that the nature of the claims between the two parties was such that as matter of law interest could not be allowed.

The question whether either party should have interest on any sum which might be due him from the other was clearly within the terms of the submission of arbitration. All manner of claims and demands were submitted. It is not necessary there should be any agreement for interest in order to permit a party to recover it. Whenever a debtor is in default for not paying money, in pursuance of his contract, he is chargeable with interest from the tiine of default, on the specified amount of money which should have been paid. (Van Rensselaer v. Jewett, 2 N. Y. 135; White v. Miller, 78 id. 393; Sweeny v. City of New York, 173 id. 414.) Interest follows the claim by way of damages for failure to pay when the party is obligated so to do.

It was not necessary in the agreement of arbitration, therefore, to specify whether or not interest should be allowed, for interest followed as matter of law the determination that a certain sum known to the party obligated was due and payable to the other on a particular day. The question as tó whether or not interest should have been allowed under any given state of facts was properly before the arbitrator and within the submission to arbitrate.

Whether or not, as matter of law, any interest should have been allowed the respondent on his claim, this court cannot now decide. There is nothing on the face of the award showing that the arbitrator decided wrongly in this respect, and his determination, therefore, is final in that regard.

The Code of Civil Procedure contains specific directions with respect to the confirmation and correction or modification of an award. By section 2373 it is provided that the court must grant an order of confirmation “ unless the award is vacated, modified or corrected as prescribed in the next two sections.” The grounds upon which an. award may be .vacated are not involved on this appeal and it is unnecessary to refer to them. The three grounds specified by section 2375 upon which an award may be modified or corrected are as follows: “ 1. Where there was an evident miscalculation of figures, or an evident mistake in the description of any person, thing, or property, referred to in the award. 2. Where the arbitrators have awarded upon a matter not submitted to them, not affecting’ the merits of the decision upon the matters submitted, 3, Where the award is imperfect in a matter of form, not affecting "the merits of • the "controversy, and, if it had'been a referee’s report, the -defect could have been amended or disregarded by the court;” in which cases the court may modify and correct the award so as to effect the intent thereof and promote justice between the parties.

It is manifest that the complaint witli respect- to "the award involved on this, appeal does not fall within any of the subdivisions above quoted, if it be assumed, as has been, that the question 'of interest, was embraced within the' submission of the award to the arbitrator. , -*

Matter of Wilkins (169 N. Y. 494) contains the latest discussion by ’ the Court of Appeals of the question of the conclusiveness of awards. In the course of the opinion, Martin* J., says: “ Where the merits of a controversy are referred to an arbitrator selected by the parties, his determination, either as to -the law or the facts, is final and conclusive* and a court will not open- an award unless perverse misconstruction or positive misconduct upon the part of the arbitrator- is plainly established, or there i§,.some provision in the agreenient of submission authorizing it. The award of an arbitrator cannot be set aside for mere errors of judgment, * either as to the law or as to the facts. If he keeps within his jurisdiction and is not ■ guilty of fraud, corruption or other 'misconduct . affecting his award, it is unassailable, operates as a fina-l and conclusive judgment, and however -disappointing it may be, the parties mast abide by it.” . The • opinion, proceeds further -to- discuss the' provisions of the Code of 'Civil Procedure permitting the setting aside, correcting or .modifying ■ of an award, and concludes that courts have no powers of review other than those' specified by the various sections' of the Code. .

The cases of Dodds v. Hakes (114 N. Y. 260) and Cullen v. Shipway (78 App. Div. 130) do not hold the contrary. In each of those cases actions were brought to set aside an award made upon a parol arbitration, and both turned upon the proposition that the arbitrators exceeded their jurisdiction and passed upon matters not submitted to them. Here the question of interest was within the scope of the submission, and even if the arbitrator erroneously allowed it the appellant is without remedy.

But upon the merits it is by no means clear’ that the arbitrator erred in allowing interest. The evidence adduced before him is not before the court on this appeal. It is only where the amounts due are incapable of being ascertained by computation that the allowance of interest is improper. (Excelsior Terra Cotta Co. v. Harde, 181 N. Y. 11.) In an action upon a contract for work done and materials furnished, which provided that the contractors were to be allowed a specific price .for each item of labor or materials furnished, they are entitled upon recovery to interest "upon their claim from the time of demand for its payment. (Sweeny v. City of New York, supra.) The arbitrator allowed interest only from a time subsequent to the furnishing of all material, and the performing of all work, and after respondent demanded that he .be paid. It is possible that if we had the evidence before ns which was adduced before,him we might.say that the amounts due from the appellant to respondent were incapable of being ascertained by computation, and, therefore, that interest could not be allowed. On the other hand, it is entirely possible that such evidence would disclose that certain sums were due the respondent, and that the parties agreed upon deductions and the price to be paid for extra work, so that whatever remained due the respondent was entirely a matter of computation, and hence that interest would follow. The question is not whether the respondent was in fact entitled to interest, but rather whether facts might have been disclosed which showed that he was entitled to it. The presumption, even if the award be not conclusive, is in favor of its correctness, and certainly in the absence of the evidence it must be presumed that facts were disclosed which did entitle the respondent to interest on the atnount which the arbitrator found due him and which he had demanded should be paid.

Not only, therefore, should the judgment be affirmed because the award is conclusive upon the- parties, but also because a state of facts might have been proven and presumptively were proven which Would .entitle the respondent to interest as matter of law.

Patterson, P. J., and McLaughlin, J., concurred; Scott and . Lambert, JJ., dissented.

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Dissenting Opinion

Scott, J. (dissenting):

It clearly appears from the papers used on the motion below that the controversy between the parties arose out of a building contract under which the respondent claimed the unpaid balance of the contract pricé, as well as a sum for “ overtime ” work, while the appellant claimed that the respondent failed to perform the contract according to its terms, whereby he asserted a right of counterclaim or set off against any amount found to, be due to respondent.

It is apparent, and not questioned, that the amount due to respondent under these circumstances was unliquidated, and it is now settled that the respondent was not entitled to recover interest on the balance that might be found due him, after the deduction of the damages for defective work or inferior materials. (Excelsior Terra Cotta Co. v. Harde, 181 N. Y. 11.) It must be conceded, therefore, that the arbitrator erred in awarding interest on the net amount which he found to be due to the respondent. It is the unquestioned and well-settled law of this State that the awards of arbitrators are, if possible, to be upheld, and that all reasonable intendments and presumptions are to be indulged in their support, and they will not generally be overruled for errors of law or fact on the part of the arbitrator. But this rule is subject to the qualification that an award may be corrected, or, if necessary, set aside for palpable errors of fact, such as a miscalculation of figures, or for any error of law where the error is patent upon the face of the award, and it appears that the arbitrator intended to decide according to the law, but did not, the reason being that, in making such correction the court merely- carries into effect the intention of the arbitrator. And it is not necessary that it should appear by express statement in the award that the arbitrator Intended to decide according to law, in order to give the court power to review. It is sufficient if this be shown by clear and necessary inference. (Fudickar v. Guardian Mut. Life Ins. Co., 62 N. Y. 392.) In the present case the arbitrator has struck a balance between the parties, and has found the sum due from appellant to respondent, and has then added interest to that sum. It is clear that he awarded this interest because he believed that the respondent was entitled to it as matter of law, and his own. affidavit is to that effect.

I think that it is within the power of the court to correct the award. Section 2375 of the Code of ¿Civil Procedure gives very wide power in that respect.' It authorizes the court to modify or correct the award as follows : “ Where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of the decision upon the matters submitted.” The submission signed by the parties committed to the decision of the arbitrator “ All and all manner of actions, cause and causes of actions, suits, controversies, claims and demands whatsoever, now pending and existing by and between them as aforesaid.”

The preamble states the nature of the controversies. It recites the execution of the building contract; that controversies had arisen between the parties as to wha.t amount, if any, was due to respondent from appellant on account of the work performed and materials furnished, whether under contract or otherwise, and also what amount, if any, was due to respondent from appellant with regard to the various claims made on behalf of the respondent against the appellant arising out of said contract, or in. connection with the alterations on said building; and also as to iyhat amount,' if any, was due to the appellant from the respondent with" regard to the various claims made on behalf of the appellant against the respondent arising out of said contract, or in connection- with said alterations. "

It will be seen from a careful reading of the submission that nothing was-committed to the determination of the arbitrator except the amounts then due from each to the other of the parties to the submission. Nothing whatever is said about interest, and it seems to be quite clear that whether or not interest should be alloxved upon the balance found due from either to the other was left as a matter to be determined by the law, and was not included in the submission as a matter to be arbitrated. It seems to me to be equally clear that the arbitrator, having found the balance, intended to include the interest in his award only because he believed that, the law awarded it under the circumstances. By striking the interest/out, the arbitrator’s award upon the matters strictly submitted to him will not be disturbed, and the question of interest will, be disposed of according to law, as it was his evident intention that it should be. In this way the true intention of the arbitrator will be carried into effect. - '

’Fortunately the arbitrator lias so framed his awards stating separately the balance found due and the interest, that no difficulty will be experienced in making the proper correction.

' The judgment appealed from should, therefore, be modified by striking therefrom the award of $5,900.33 interest, and as modified affirmed, with costs to appellant.

Lambert, J., concurred.

Judgment affirmed, with costs. Order filed.