51 W. Va. 493 | W. Va. | 1902
Smith D. Turner filed a bill in the circuit court of Wood County against Samuel Stewart and others setting up that Turner had recovered a judgment against Stewart and Wells,
One ground specified for the reversal of the decree is, that the court overruled Seaman’s demurrer to the bill. It is laid down in Bensemer v. Fell, 35 W. Va. 15, and National Bank v. Distilling Co., 41 Id. 530, that a judgment in favor of A against B is conclusive, not only between them, but also as to strangers, as to the existence of the liability between A and B, and cannot be, impeached by another creditor of B except for fraud or collusion. And it is further laid down in Glenn v. Morgan, 23 W. Va. 467, that whilst indulgence to a principal debtor by a creditor will, under circumstances, release a surety,
It is, however, suggested, that though the debt of Seaman could not be denied on matter of the bill, yet as Stewart’s administrator excepted to the allowance of that debt by the commissioner, that exception was ample to overthrow that debt. I do not think so. Cases are cited to show that when a cause is referred to a commissioner to ascertain debts, one creditor may contest the debt of another. This is so, if he contest on grounds available to him in that way. I do not see that this could bo done by mere exception to a commissioner’s report.
Such defense could be made by an answer setting'up the matter working a release of Stewart as surety. By such an answer, framed like a cross bill, Seaman would be told of the facts supposed to work a release, and would be given opportunity to meet them; but mere exception to the report would not perform that office. The administrator ,of Stewart did file an answer setting up this matter; but it made no parties, asked no affirmative relief against the one thousand two hundred dollar decree in favor of Seaman, and no process issued upon it. A decree was rendered upon it in the absence of all
But let us súpose that this agreement to arbitrate had been properly introduced into the case as releasing Stewart as a surety. Could we then sustain the decree rejecting Seaman’s debt? I think not, for the reason that it is not shown that Stewart was surety for Wells. The burden of proving this fact was clearly on Stewart. Seaman, Yenoy and Burdett made a contract with Wells to cut and haul logs to a saw mill, and haul lumber from it to a railroad. Stewart wrote a letter to Yenoy stating that he had shipped him hay and meal, and would ship him more, as also middlings, thus affording the inference that Stewart was the real contractor, not Wells, or that Stewart was interested jointly with Wells. The letter stated “in regard to your contract with Mr. Wells, I will see that you get your paje” Upon this letter was rendered the decree in favor of Seaman against Wells and Stewart for one thousand two hundred dollars, Seaman showing that he alone was entitled to the debt. This does not show the relation of surety and principal, but rather the reverse. Furthermore, Stewart and Wells made an agreement, another agreement, to arbitrate a controversy “as to the amount the first party (Stewart) owes, if anything, to said second party (Wells) on contracts for cutting, logging and sawing lumber and ties, and sticking and delivering lumber on board cars,” thus tending to show that it was Stewart who was the real contractor, that is, that Seaman, Yenoy and Burdett were really doing the work for him, as he got the lumber. The award under this arbitration found Stewart indebted to Wells in one thousand seven hundred and fourteen dollars and seventy-five cents, and provided that credit should be given Stewart for what might be decreed
The legal question is raised as to the effect of the agreement to arbitrate to release a security. It is contended that a mere agreement to submit to arbitration is revocable, and does not tie the hands of Seaman, and therefore does release Stewart, if he were a surety. We are cited in support of this proposition to Kinney v. B. & O. R. R., 35 W. Va. 385. That case only holds that a provision in a contract that any controversy under it shall be arbitrated, does not debar from suing, does not oust the courts of jurisdiction. That is so before a controversy has arisen; but an agreement to arbitrate an actually existing controversy is different. 2 Am. & Eng. Ency.. L. (2d Ed.) 570. By common law such an agreement is revocable until award made, and does not bar a suit on the original demand; but under our Code, chapter 108, an agreement for arbitration is not revocable. Corbin v. Adams, 76 Va. 58; 3 Cyc. 735; Riley v. Jarvis, 43 W. Va. 43. An award by common law was a bar to an action on the original cause. Martin v. Rexroad, 15 W. Va. 512; Tennant v. Divine, 24 Id. 387. Therefore, I should say that an agreement to arbitrate would release the surety, if an arbitration agreement would do so. But would it?' Arbitration is a process of settlement of controversies allowed by the common law, and favored by it as tending to end them speedily and cheaply. It is expressly allowed by our Code. It is the substitution of a tribunal chosen by the parties instead of the regular courts existing by law; but that tribunal is one recognized by law as a legitimate medium for the adjudication of contested rights. 3 Cyc. 581; Wamsley v. Wamsley, 26 W. Va. 45. This agreement provided that the award should be returned to court for decree, and thus contemplated all the benefits of a decree against the debtor by lien and execution for the protection of the surety. I do not say how it would be in the absence of such provision. Therefore, I do .not see why the selection of this process by a creditor to enforce his demand should alone release a surety as granting extension of time any more than suing the principal alone in court.
Counsel for Stewart contends that the arbitration released him, and cites Coleman v. Wade, 6 N. Y. 44. This case is referred to in 2 Am. & Eng. Ency. L. 804, note 1 (2d.Ed.),
There is another reason why the agreement to arbitrate does not release Stewart. He united in the bill of review for the very purpose of suspending and reversing Seaman’s decree before this agreement to arbitrate. He it was who first sought to defeat the collection of that decree from Wells. And he asked a court of equity, under such circumstances, to say that extension of time by Seaman released him ? The bill of review is not in the record, but the theory of Stewart’s side of the case is that the arbitration involved the bill of review, and the bill of review involved Seaman’s decree. If so, that bill of review tied up the decree, if an injunction was awarded to its enforcement; and if such injunction was not awarded, still the bill of review would justify Seaman in waiting until its decision, and debar Stewart from saying that the arbitration released him. So a court of equity would say, because Stewart was fighting and delaying the collection of the decree. In truth the agreement does not include that bill of review, it being a separate suit, and it is doubtful whether we can say that arbitration related to that decree, as it is not reasonable to say that the agreement to arbitrate the main suit intended to contest what was-a final decree; but in view of the latter consideration I am proceeding on the theory that the agreement made the decree the subject of arbitration.
Another reason why said agreement to arbitrate does not release Stewart is, that before the date of that agreement and after Seaman’s decree, Stewart and Wells made another agreement to arbitrate the matters in difference between them growing out of the same transaction out of which Seaman’s decree arose, and the award found Stewart in debt to Wells one thousand seven hundred and fourteen dollars and seventy-five cents, a ■sum greater than Seaman’s decree, and provided that Stewart should have credit for whatever sum might be awarded or decreed H. S. Yenoy & Company, in their suit against Stewart and Wells and that if Stewart should be held liable therein the amount should be deducted from said one thousand seven hundred and fourteen dollars and seventy-five cents. This suit of H. S. Yenoy & Company was a suit wherein the one thousand two hundred dollar decree was rendered in favor of Seaman, he
Stewart was thus paid to pay this debt. How could he be harmed by indulgence to Wells by the arbitration? “The discharge of Freer (principal) could in no possible way interfere with their rights or liabilities, so long as they held in their hands a complete indemnity against the bond, and he is not accountable to them, if they are obliged to pay it.” Opinion in Moore v. Paine, 12 Wend. 123. See Crim v. Fleming, 101 Ind. 154. It is on the same principle as an endorser who has a fund in'liis hand to indemnify him. In Bank v. Vanmeter, 4 Rand. 558, Judge Green said, that the endorser was not released “because he could not possibly suffer any damage by failure to give him notice: since the only purpose of notice would be to inform him of the necessity of resorting to the drawer for indemnity, which in this case, is unnecessary, as he already has indemnity in his hands.” This obvious doctrine is found in 2 Dan. Nego. Ins. s. 1128 and May v. Beissean, 8 Leigh pp. 185, 196. This doctrine is founded on the principle that indulgence by a creditor to a principal debtor does not release a surety when it can work no harm to him. Bank v. Parsons, 45 W. Va. p. 699. “But the surety will not be discharged in any case where it can be clearly proved that the act of the creditor has worked no real injury.” 2 Danl. Nego. Ins. s. 1311. Under the rule last stated it seems to me that another reason why this arbitration cannot release Stewart is that Wells was in
We may plainly go further to fortify the'position of indemnity just stated, and say that as Stewart had in his hands this money, we may regard this award as one in favor of Seaman, and as giving him right upon it, alone, to sue Stewart for its amount, though Seaman was a stranger to this award, because as to Stewart and Wells it was binding and deducted a fund for Seaman, as we find it stated in 2 Am. & Eng. Ency. Law, note p. 811 that air award that one of the parties pay a sum to the creditor of another party may be enforced by the creditor, though a stranger to the award, citing Scearce v. Scearce, 7 Ind. 286. I think that principles stated in Hooper v. Hooper, 32 W. Va. 525, and perhaps in Roberts v. Coleman, p. 156, go in this direction. This position I just notice finds support in 2 Am. & Eng. Ency. Law, 806, stating that “an 'award has sometimes been admitted as evidence in favor of strangers.” Also by 3 Cyclo. Law & Prac. 690. Is not this instance one within the reason of that exception to the general that an award does not bind strangers? This award is in favor of this stranger.
Another question in the case is, does the award do away with Seaman’s decree ? Is it merged in the sum found by the award in favor of Seaman, Venoy and Burdette against Wells? It is claimed that the submission did not refer to the matter in controversy in the suit of Seaman and the bill of review therein, but described another suit; but no other suit to which it could apply appears, and, besides, I think it fairly appears that -it does so apply.
Does this award destroy the lien of Seaman’s decree for one thousand two hundred dollars? I think not, and for several reasons. The submission was not signed by Stewart. “If parties to a pending suit enter into a submission to arbitration, all those who are of record parties to the suit must unite in the submission, whether they are really interested or nominal parties only.” 2 Am. & Eng. Ency. L. (2d Ed.) 619. “A submission to arbitration of a pending suit, without the consent
An award of itself is not a lien. 3 Cyc. 735. Yet it is said this award destroys the lien of Seaman. Would equity take
This doctrine of merger, which, in this case, would be the an-niliiliation of the prior security by another later one, is technical, and ought not to be permitted, even if by technical law it could be applied in this case, as it cannot, to defeat justice. It has inore rigid force in courts of law than in courts of equity. The latter courts will apply it, or refuse to apply it, as justice demands. In 20 Am. & Eng. Ency. L. 590, we find it stated that “in equity the legal rule of merger is not regarded, as inflexible,” and many cases are cited in note 10 for the proposition that “equitjr consults justice and intention of the parties.” The intention of the award was not to destroy, but to enlarge Seaman’s rights, and even if Stewart had been,a party to the award, so as to confer its benefit upon Seaman, equity would not destroy the lien of his decree until the award was carried into decree so as to be a lien; and even then I think it would not post-date his lien to the date of the award or decree upon it, but would let him retain the lien of the decree as of its date, to the extent of its amount. Equity will not destroy securities on mere technicality to defeat justice, but will look at substance and preserve securities to attain such justice.
Another consideration is presented as to the effect of the award as a merger, that is, whether a decree or judgment merged by an award, as the general rule is that merger is only of a, lower security by one higher in legal dignity. Here a question would arise whether this award is a decree in its force, that is, whether when a submission to arbitration provides that the award shall be entered as the judgment of a court, and is thus a statutory award, an actual judgment or decree upon it is es-
It does not seem to me that an award upon the same original cause of action as was the basis of an antecedent judgment, will merge that judgment, unless carried into a second judgment but when the subject of the arbitration is not the original cause of action, but the former judgment, it is different, because “when one judgment is made the basis of the recovery of another judgment, the first judgment, with all its incidents and liens is merged in the second.” 20 Am. & Eng. Ency. L. (2d
Therefore, we hold that Seaman’s decree is a valid lien upon Stewart’s realty at its date and a debt against his estate, and as the decree gave Wells the whole of the debt awarded, without deduction of the amount due Seaman, so that we cannot conveniently in this Court modify the decree, and marshal the liens, we reverse the decree, and remand the case to the circuit court with direction to enter a decree giving Seaman the benefit of his decree of one thousand two hundred dollars4 as a lien in its proper order on Stewart’s realty.
Reversed.