176 Mo. App. 352 | Mo. Ct. App. | 1913
This is a suit in equity instituted in the circuit court of St. Louis county for the purpose of setting aside a valuation or appraisement of certain real estate .situated in the town of Webster Groves,, in said county, made by two appraisers as of date J an-
The lease in question was executed January 1, 1860, by one Thomas J. Payne, as lessor, and one Frank E. Robinson, as lessee, whereby the premises therein described were leased for a term of one hundred years, commencing January 1, I860; the plaintiff having become the owner in fee of the property in question, and entitled to all the rights of the original lessor in the lease, and the defendant, respondent here, having by mesne conveyances and assignments acquired all of the rights of the original lessee therein.
The provisions of the lease here pertinent are as follows:
“And it is further agreed that after the 1st day of January, 1880, the annual rent of the ground hereby leased, shall be at the rate of six per cent per annum on the value of said ground only, without regard to the improvements thereon; and there shall be a valuation anew of said ground every ten years; the first of said valuations shall be made on the first day of January, 1880, or within ten days thereafter, and the other and following valuations shall be at the end of each term of the succeeding ten years, and on the first day of January or within ten days thereafter. If the parties hereto cannot agree upon the value of said land at the respective periods for making said valuations they shall each choose a person to make said valuations and if they (the persons chosen) cannot agree, they shall choose a third person, who shall be a landholder and a decision of two of the three shall be binding. If the said lessee, or his legal representatives or assigns shall fail to choose a person to value the said ground at any of the several valuations herein
“And if the lessor, his legal representatives or assigns, shall fail to choose a person to value said ground at any one of the said several valuations herein specified, the said lessee, or his legal representatives or assigns, shall request the acting sheriff of the county of St. Louis to designate such person, .who shall be a .landholder, and the acts of the person so chosen shall be binding.
“In making said several valuations of the ground herein, specified and stipulated to be made, the improvements on said ground shall not be taken into consideration.”
The petition sets up plaintiff’s ownership' of the property, the existence and terms of the lease, and the relation of lessor and lessee between plaintiff and defendant.
It then alleges that on the first day of January, 1910, or within ten days • thereafter, was" one of the times or periods for fixing the valuation of the ground for the purpose of ascertaining the amount of rental to be paid annually therefor for the ten years next ensuing; that on or about January 5, 1910, plaintiff notified the defendant to negotiate with one Charles A. Baker, plaintiff’s representative, for'the purpose of agreeing on the value of said land, and that whatever agreement defendant and said Baker might reach would be satisfactory to plaintiff; but that respondent refused to negotiate with said Baker, and on or about January 5, 1910, notified the plaintiff that the latter and defendant could not agree upon the valuation of said ground, and that defendant thereupon had appointed one Edward Clayton, a landowner, of St. Louis county, as her appraiser to determine said value, and requested plaintiff to appoint some one to act for her; and that on January 13, 1910, the sheriff of St. Louis county appointed one John Connou as the appraiser of
The petition further avers that thereafter plaintiff notified said Clayton, prior to the time that he and said Connon acted, that she desired to be heard at such time and place as the appraisers might meet to make the valuation of the ground, for the purpose of laying before them evidence of its true value, and asked that she be notified of the time and place of such meeting; but that Clayton and Connon, for the purpose of preventing her from having this opportunity, failed, refused and neglected to notify plaintiff of the time and place of such meeting.
The petition then avers that the day following that upon which Connon was appointed, he and Clayton met and pretended to fix the value of said land, without regard to the improvements, at the amount of $2000; that the value placed by them thereupon was so much less than the true and correct value as to amount to misconduct and partiality on their part, to the great injury to plaintiff; that, in fixing such value, said appraisers did not consider the true and correct value of the ground, without regard to the improvements, but undertook to fix the value of what they termed the franchise,” or what they in their judgment thought was a proper rental value of the premises, irrespective of the true value of the ground as required by the lease; that the true and correct value of the property, without regard to the improvements, was $10,000; that said appraisers were biased and guilty of misconduct and partiality in fixing the value thereof; and that plaintiff on February 4, 1910, notified the defendant .in writing that .she would not accept or abide by the said valuation.
The prayer of the petition is for an order and decree setting aside and vacating the appraisal of said
The answer admitted plaintiff’s ownership of the ground, the existence and terms of the lease and the relation of lessor and lessee between plaintiff and defendant; that January 1,1910, or within ten days thereafter, was a time or period for fixing a new valuation upon the ground for the purpose of ascertaining the rental, and the appointment of the appraisers as alleged in the petition.
After denying the other allegations of the petition, the answer sets up that plaintiff and defendant had an interview on January 5, 1910, for the purpose of fixing the value of the ground under the terms of the lease, and that they could not agree; that by reason of such disagreement defendant appointed said Clayton as her representative to make the valuation and notified plaintiff and requested her to choose some one to represent her for such purpose; that the plaintiff failed to thus appoint an appraiser, and that thereupon said John Connon was appointed by the sheriff, at defendant’s request.
The answer then avers that said appraisers, Clayton and Connon, were impartial and unbiased, and that two thousand dollars represented the true value of the property, exclusive of improvements.
The reply was a general denial of the new matter in the answer.
Plaintiff, in her own behalf, testified that prior to January 5, 1910, she had not seen defendant for some months; that on the last mentioned date defendant called at her house to see her in regard to placing a valuation upon the ground; that she informed defendant that she had left the transaction of all of her business to her brother, Charles A. Baker, who was her agent, and requested defendant to see him in regard
“St. Louis, Mo., January 5, 1910.
“Mrs. Mary B. Sholz:
‘£ Since you cannot agree with me upon the valuation of that part of lot 2 of T. J. Payne’s subdivision of the Sarpy tract which I hold under lease of Mr. S'. J. Payne to Fred E. Robinson, that is 465 feet front on the north side of Lockwood avenue, by a depth northwardly of 267 feet, more or less, for rental determination, I desire to inform you that I will appoint Mr. Edward Clayton, a landholder of St. Louis Co., as my appraiser, and request you to appoint another to act for you to determine such valuation.
“Yours respectfully,
“Sarah M. Mills.”
Plaintiff further testified that on or about the 13th or 14th day of January, 1910, the defendant again came to her house and left with her the following paper, which was admitted in evidence, viz.:
“ January 13, 1910.
“Mrs. Mary B. Sholz and Miss Sarah M. Mills.
“Ladies: Please take notice that, under indenture of lease dated January 1, 1860, made by Thomas J. Payne of St. Louis county, Mo., to Frederick E. Robinson of said- county, I have appointed John Con-non, a landholder of said county, as a valuer or .appraiser of- the premises in said indenture described and still remaining subject to the terms of such indent- ' ure, by reason of the fact that the representative of the lessor has failed to choose a person to value said ground.
£ £ Yours respectfully,
“John (xrueninger, Jr.,
“Sheriff of St. Louis Co.,’Mo.”
This witness testified that thereafter he had a further conversation with Connon in the presence of Walter Sholz, a son of plaintiff, in which he asked Con-non how such a low valuation happened to be placed upon the property, and that the latter stated that $2000 did not represent the value of the property, that it was more valuable than that, and that he thought that the value at which it was appraised represented simply the amount agreed upon as the basis of the rental, and
The witness further testified that, subsequent to January 14, 1910, he had a conversation with Clayton, the other appraiser, in relation to the appraisement, and that the latter' opened the conversation by saying, ‘ ‘ Perhaps you may not be pleased with the award that was made, but if you are not you must see the other man who represented you; ’ ’ that Clayton said that he knew that $2000 did not represent the value of the ground, but was only an amount that had been agreed upon as a basis of rental for the next ten years; that it was the amount that had been agreed upon .in the previous decade, and that if it was right at that time, it was right at the time of this appraisement; that Clayton said that he represented the other' party.
On behalf of plaintiff, Mr. Walter Y. Sholz, plaintiff’s son, testified that he was present at the conversation between Connon and Baker, concerning which the latter testified, and that during this conversation Connon stated that he did not know that he was acting as appraiser for plaintiff; that he had been appointed by the sheriff, and that he was not familiar with the terms of the lease and had not seen it; that he understood that the appraisers were to appraise the value of the ‘ ‘ franchise, ’ ’ saying that he knew that the ground was actually worth four or five times as much as the amount of the appraisement.
This witness also testified that he had a conversation with Clayton, the other appraiser, in which the
John M. Connon, the appraiser who was appointed hy the sheriff, called as a witness for plaintiff, testified as to the meeting between himself and the other appraiser to appraise the property; that he had seen the defendant when she brought him the paper signed hy the sheriff appointing him as an appraiser, but that she said nothing to him in regard to the meeting of the appraisers or the value of the property; that no notice was given to plaintiff or her agent that the meeting was to be held; that he had read the lease in question and that the appraisers had the lease when they met to appraise the property, and that he looked at the property before appraising it.
In respect to his conversation with Baker, concerning which the latter testified, this witness on cross-examination stated that he had such • conversation but could not recall just what was said. 'When asked if he had on that occasion stated that $2000 did not represent the value of the property the witness said: “I might have said something to that effect in this way, that in view of the fact that all these extra assessments were on, I thought that that was about the right price in my mind that would be the price to assess the value at.” The witness said that he did not recall saying that he had not read the lease, and that Baker was mistaken in saying that defendant’s counsel had instructed him what to do, as he had not met defendant’s counsel.
On redirect examination, this witness testified concerning the improvements, such as the construction of sewers, sidewalks, and streets, that were being made
Edward W. Clayton, the other appraiser, who was appointed by defendant, testified that he had a conversation with defendant prior to his appointment by her- as an appraiser, in which he told her that he did not know whether she wanted him, as his ideas might not agree with hers as to the value of the property, and asked that she get some one else; that the defendant told him that she did not want to do this; that nothing was said between them as to the value to be placed upon the property; that defendant was at his office once, at which time they had a conversation, but that he could not state what was said by either of them; that on the afternoon of January 14,1910, prior to the meeting to fix the value of the property, he met defendant on the train and she gave him a paper which h^cl be'en prepared, ready to be filled out, to be used by the appraisers to certify to their appraisement, asking if the appraisers would not meet as soon as possible, and the witness promised that this would be done; that that evening the witness telephoned the other appraiser, arranging to meet with him that night to make the appraisement. The witness testified that he had
On behalf of plaintiff, Sylvester C. Mercer testified that he was present and heard the conversation between Baker and Clayton concerning the value which the appraisers had placed upon the land in question; that Baker asked Clayton how the value was arrived at, and that the latter stated that the appraisement did not represent the selling value of the property, but represented the basis on which the rentals should be fixed; that Clayton also said something in regard to seeing Connon, as he (Clayton) represented the other-side.
On behalf of plaintiff, four witnesses, all real estate agents and dealers in property in Webster Groves, testified as to the value of the ground, without the improvements, as of January 1, 1910. Charles A. Baker, plaintiff’s brother, testified that the ground was worth $10,000; another of these witnesses, Al. T. Smith, testified that in his judgment the property was worth from twenty to twenty-five dollars per front foot for the 165 feet frontage, i. e., that the property was worth between $9300 and $11,500; Theo. R. Appel, testified that its value was $10,000; the testimony of another witness, Morgan Coggeshall, was to the effect that its ' value was $13,950.
Defendant in her own behalf testified to taking the instrument of January 5, 1910, quoted above, to plaintiff’s house; that she asked plaintiff to agree with her
3 Defendant’s counsel, Judge Leo Rassieur, testified to preparing the papers for appointing the appraisers; that as to the appointment of an appraiser by the sheriff, he asked defendant to-suggest some one of good standing with whom she had no business'or social connection and who could be relied upon to make a fair appraisement, and that defendant suggested Oonnon, whose father had been an appraiser of the property ten or twenty years before. The witness also testified that he had an indistinct recollection of seeing Clayton prior to the appraisement, and of the latter’s asking how he should be guided in making the appraisement, and that the witness told him to read the lease and follow it.
On behalf of defendant, three witnesses testified with respect to the value of the property as of January 1, 1910. One of these, Judge E. W. Mills, a nephew of defendant, testified to' the effect that the property was worth nearly $6000. Another of these
I. The position taken by learned counsel for appellant is that this was a common law arbitration and award, and that therefore appellant was entitled to notice of the time and place of the meeting of the arbitrators, and especially so when she had made request therefor. Respondent denies that it was a common law arbitration and award, and hence not governed by the rules applicable to an arbitration.
The authorities in general hold that whether or not a proceeding such as this is an arbitration, depends upon whether there can be said to be a controversy or dispute between the parties, which is thus referred for settlement. If there has been a difference or controversy between the parties prior to their submitting the matter, then it is regarded as an arbitration. If, however, the parties have entered into a contract, leaving the price of certain property merely undetermined, and* agreeing that the value thereof shall be fixed by some third person or persons to be selected therefor, and that the parties will be bound by such valuation, the essential elements of an arbitration are said to be lacking, for in such an instance there is no controversy or dispute. Under such circumstances, the persons so chosen to fix such valuation are generally regarded as mere appraisers or valuers, and the proceeding is not governed by the rules applicable to an
The question is very fully and ably discussed by Phillips, J., in M. K. & T. Ry. Co. v. Elliott, supra, in which it is pointed out that the courts and text-writers are practically of one accord, holding that a proceeding, whether it be an appraisement or otherwise, is regarded as an arbitration whenever there is an antecedent controversy, dispute or disagreement between two or more parties which they submit to a third person, or third persons, for decision.
This precise question was touched upon in Holmes v. Shepard, 49 Mo. 600, referred to in M. K. & T. R. Co. v. Elliott, supra. The action was one in equity concerning the valuation of property by appraisers under the terms of a lease similar to that here involved. There, as here, the rent was to be fixed every ten years by a revaluation of the property by the parties, in case they should be able to agree on the same; but in the event they should fail to agree thereon, then an appraiser was to be appointed by each of them, and the two thus appointed to choose a third, in case they themselves should disagree. In that case, some of the parties interested in the leasehold were minors at the time for the revaluation in question, and the lessor undertook to- proceed ex parte to appoint appraisers and have the property revalued. It was héld that the valuation thus made was void and not binding on anyone; and that the rental would necessarily continue at the .old rate until a proper valuation was made. The
In M. K. & T. R. R. Co. v. Elliott, supra, Judge Phillips remarks that in all of the cases cited by counsel for respondent therein “the contract provided in the first instance for valuers of the property transferred, without any effort being first had between the parties to come to an agreement, with the single exception of Holmes v. Shepard, supra, in which case it is evident to my' mind that Judge Adams’ attention was not directed to the distinction here sought to be made, for the fact is the case was disposed by the court on other grounds. This distinction is observed by text-writers and courts, and must be because of the inherent principle involved.”
If such a distinction is to be made as that to which we have referred to above, then it would seem, in the case before us, that if appraisers are to be called in at all, then the proceeding must in its nature be an arbitration. This follows from the fact that the lease distinctly provides that such appraisers or valuers are to be appointed and are to act only if the parties “cannot agree upon the value of said land at the respective periods for making said valuations.” The disagreement of the parties in this respect is a condition precedent to the right to appoint appraisers and submit this question to them. If there be no disagreement or controversy, then of course there is no occasion to submit the question to others; and if there be such disagreement or controversy, then it would seem that the
Be this as it may, and although what was said in Holmes v. Shepard, supra, to the effect that a proceeding such as this is not an arbitration, was obiter, nevertheless it is an expression of our Supreme Court on this question which it is doubtless our duty to follow; thus compelling us to hold that an appraisement under the terms of this lease is technically not an arbitration, and that, not being governed by the rules applicable to arbitrations, the plaintiff could not require notice of the meeting of the appraisers in order that she might be represented, for it is said that where an appraiser is a mere valuer and not an arbitrator, he is expected to act upon his own knowledge and judgment, and that evidence of witnesses, statements of parties or counsel, etc., are not contemplated. [See Norton v. Gale, supra.]
II. To hold, however, that such an appraisement is not a common law arbitration is by no means determinative of this case. Here it merely means that if the appointment of the appraisers was warranted and valid, and if they otherwise acted properly, then the appraisement is not to be held void for failure to give appellant notice of the time and place of the meeting at which the property was appraised. The record, in fact, abounds with evidence calling for the exercise of the equity power of the court to set aside the appraisement, as prayed for by plaintiff,, aside from the failure of the appraisers to proceed according to the rules governing arbitrations. One very cogent reason why the appraisement, as made, cannot stand, is that there could be no valid appointment of appraisers under the terms of this lease, unless and until there was an actual disagreement between the parties respecting the value of the land. The case of Holmes v. Shepard, supra, is here directly in point. There the court said:
According to the testimony of both of the parties to the record, the respondent called at appellant’s house on January 5, 1910, armed with a signed notice of the appointment of Mr. Clayton as her appraiser; that respondent spoke to appellant in regard to the valuation to be made of the property, and the latter referred her to appellant’s brother and agent requesting that the matter be taken up with him. No attempt was made to agree upon any value, and no figure was suggested by either party. Neither did appellant thereafter make any effort to reach an agreement with plaintiff’s agent.- Nothing whatsoever was done, except that the matter was broached to appellant by respondent, and upon appellant’s requesting that it be taken up with her agent, respondent at once served notice of the appointment of her appraiser. From this it cannot be said that the parties were unable to agree upon the valuation of the land, for indeed some effort in that direction must be made before it can be said that the parties “cannot agree.”
Eespondent’s counsel urge upon us that it behooved respondent to act promptly, otherwise she would have forfeited her rights under the lease; and so the trial court remarks in a memorandum filed by the court in disposing of the case. This must be conceded, but it does not mean that the respondent was
III. But there are other compelling reasons why a court of equity cannot permit the appraisement to stand, even had the contingency arisen which would justify the appointment of appraisers; for, regardless of whether or not it is technically an arbitration, if the appraisers have proceeded under a .mistake with respect to .that which they were to determine or a misconception of their duty in the premises, or acted with undue partiality, and the valuation placed upon the property does not reflect their real and independent judgment, the case is one which invites equitable interposition.
Certain it is that an appraisement such as this rises at most to no higher dignity than an arbitration
Here the appraisers were men of high standing and excellent reputation in the community, and the record before us negatives any idea of actual fraud or corruption on their part. Nevertheless the record abounds with evidence that they proceeded under a mistaken notion of that which they were to determine and under an entire misconception of their position and the duties devolving upon them, and that the appraisement certified to by them does not reflect their real judgment upon the question which was sought to be submitted to them for their decision.
One of the appraisers, Mr. Connon, testified that, in appraising the property, he took into consideration special assessments against it for improvements, such as sewers, sidewalks, streets, etc., in arriving at what ' he thought would be a proper rental for the property, for .the reason that the lessee would have such special taxes to pay. This of course was erroneous, for the function of the.appraisers was to value the land (without improvements), and not to determine what in their opinion would be a fair rental therefor, considering the taxes which the lessee would have to Near. Furthermore, two witnesses testified that Mr. Connon, in conversation with them, subsequent to making the appraisement, stated that he understood that the appraisers were to appraise the value of the “franchise,” saying that he knew the ground was actually worth four or five times the amount of the appraisement; and Mr. Connon gave no testimony on the witness stand denying such statement on his part.
These facts indicate such mistake and misconception on the part of the appraisers as to make it clear that their appraisement did not and could not, under the circumstances, represent their judgment as to what was the actual value of the ground, and to vitiate their finding altogether; for indeed it is clear that they did not determine the question which was intended to be submitted to them, but another and different question altogether. And, however pure their motives may have been, the result is nevertheless such that a court of equity would be bound to say that no appraisement was had as contemplated by the lease. [See Coffin v. Ins. Co., supra.]
And in addition to the above, the record discloses a further mistake or misconception on the part of the appraisers, of such a nature as to make it appear that they did not exercise their own judgment and discretion upon the matter in hand, owing to a misconcep-tion of the duties enjoined upon them. That is to say, there is again the testimony of two witnesses, which was in no manner contradicted, that in a conversation with Mr. Clayton, the latter speaking to’ appellant’s brother said: “Perhaps you may not be pleased with the award that was made, but if you are not you must see the other man who represented you;” and again that Mr. Clayton said that he represented “the other party.” In like manner there is the uncontradicted testimony of two witnesses that the other appraiser, Mr. Connon, stated, in effect, that he did not'consider that he represented appellant as. she had failed to
It was the duty of each to act, not as the special representative of either party to the controversy, but to sit in judgment upon the matter submitted to them and impartially and fairly determine that question, regardless of how the result thereof might affect either party interested. Their duties were quasi judicial. And it scarcely need be stated that one may not act in a judicial or quasi judicial capacity, and at the same time represent the special interests of one party to the controversy. One who is possessed with the idea that he is the special representative of one of the parties in interest, and that it is his duty to look out for and protect the interests of such party, necessarily cannot, while laboring under such impression, occupy the position of arbitrator or judge with respect to such matter. “For the purpose of illustrating the nature of the functions devolving upon arbitrators, they have been regarded as the agents of both parties alike, so as to require equal justice between them, without favor to either. But, however honest may be an arbitrator’s intentions, it is highly improper that, he should regard himself as the agent or partisan of the party appointing him; and because of the rule requiring impartiality of arbitrators, an award which appears to have been made as a result of partisanship should not, irrespective of the honesty of the arbitrator’s motive, be allowed to stand.” (Italics ours.) [3 Cye., p. 625.] And the same rule here obtains whether this be technically an arbitration or otherwise.
It appears that, without any improper motives on
Learned counsel for respondent urge that the mere fact that the valuation is lower than it appears' from the evidence it should be, or that the appraisers merely erred in judgment, does not furnish ground for equitable relief. This may be conceded without in the least affecting plaintiff’s right to have the appraisement set aside, though it is well recognized that an award (and likewise an appraisement) may be so palpably excessive or inadequate as alone to produce a conviction that it is not the result of the honest, independent judgment of the arbitrators. [See 3 Cyc., 749.] And where the award is not so excessive or inadequate as to produce such conviction, nevertheless the excessiveness or inadequacy thereof may be taken into consideration in connection with other circumstances showing the existence of grounds for setting aside the award.
The very cases most strongly relied upon by respondent to sustain the appraisement clearly recognize the principles here invoked. That the facts were not present in those cases, as here, justifying equitable relief, and that they proceed upon no different theory than that which we here follow, is quite apparent from the following excerpts:
Thus, in Board of Education v. Frank, 64 Ill. App. l. c. 372, 373 (cited also by the learned trial judge in
“Where parties contract together as to methods of determining the value of property as a basis for fixing its rental, and such methods are pursued, neither side may obtain a standing in equity to be relieved from his bargain. ... If the appraisers were lawfully appointed, and made their valuation in accord- . anee with the terms of the lease, the mere fact that their valuations were excessive, or, in other words, that they had merely erred in judgment, -would not furnish ground for relief in equity.” (The italics are ours.)
And again in Allen v. Hickam, 156 Mo. l. c. 58, 56 S. W. 309, cited by respondent, the court quotes from Bridgman v. Bridgman, 23 Mo. 272, as follows:
“In a proceeding like the present, the question is not whether the arbitrators, who are the final judges both of the law and the fact, selected by the parties themselves, have erred in their judgment in respect to either, but whether they have been guilty of partiality or corruption, or of any other misconduct prejudicial to the rights of the parties, or have failed to make a final, mutual and definite award, or whether their award was procured by fraud or other undue means; but the testimony here offered and rejected was to prove that the arbitrators had erred in judgment, and not to establish any legal grounds of relief to which we have referred, and was therefore properly rejected.” (Italics are ours.)
And in Goddard v. King, 40 Minn. 164, which respondent cites, the court says:
“The difference between the value as appraised by the referees, and as found by the court ($50,000 and $30,000), though great, is not of itself a reason for setting aside the award. The award is presumed, unless fraud or mistake is shown, to be the honest exercise of their judgment by the referees. . . . The parties bound themselves to abide by the judgment of
In the case before us, it is not the mere inadequacy ■of the appraisement (although it is manifestly so low as to strongly appeal to the conscience of the court) nor a mere error of judgment on the part of the appraisers that furnishes the ground for setting aside the appraisement; but, aside -from the fact that the appraisers were not lawfully appointed under the terms of this lease, it is their mistake of fact as to that which they were to determine and what they were to take into consideration, their misconception of the -duties of their position whereby they (unintentionally and without improper motives we have no doubt) acted with partiality, so that the appraisement made did not in any proper sense reflect their real judgment and opinions touching the value of the property in question. That the result does not reflect their independent judgment as to such value abundantly appears from the evidence.
In view of the facts which obtrude themselves from this record demanding equitable interference and relief against the appraisement made in the manner and under the circumstances detailed above, it is altogether clear that the learned chancellor below erred in finding the issues in favor of the defendant and in dismissing plaintiff’s bill. The judgment of the circuit court must therefore be reversed, and the cause remanded, with directions to enter a decree for the plaintiff in accordance with the prayer of her petition. It is so ordered.
