Skinner v. Gaither Corp. , 234 N.C. 385 ( 1951 )

67 S.E.2d 267 (1951) 234 N.C. 385

SKINNER
v.
GAITHER CORP.

No. 309.

Supreme Court of North Carolina.

October 31, 1951.

Barden, Stith & McCotter and W. B. R. Guion, all of New Bern, for plaintiff appellee.

Worth & Horner, Elizabeth City, R. E. Whitehurst, New Bern, for defendant appellant.

BARNHILL, Justice.

The amount to be paid to the plaintiff for constructing the building and the balance, if any, still due and unpaid thereon are not subject to arbitration under the contract. Plaintiff sues, in part, to recover an alleged balance due. In this respect, in any event, the complaint is sufficient to repel the demurrer. Wiscassett Mills Co. v. Shaw, Com'r of Revenue, 233 N.C. 71, 62 S.E.2d 487, and cases cited.

But defendant insists that as to the repair bill the arbitration provisions of the contract prevail and preclude plaintiff's right to resort to the courts until after the arbitration is had as agreed by the parties. Its position in this respect is likewise untenable.

This is not a contract to arbitrate under the provisions of our Uniform Arbitration Act. That Act, G.S. Chap. 1, Art. 45, applies only to agreements to arbitrate controversies existing between the parties at the time of the execution of the agreement to adopt this method of settlement. Hence, decision here is controlled by our cases pertaining to contracts of this type to which the common law rule applies.

It is settled law in this jurisdiction, as in most others, that when a cause of action has arisen, the courts cannot be ousted of their jurisdiction by an agreement, previously entered into, to submit the rights and liabilities of the parties to arbitration or to some other tribunal named in the agreement. Kelly v. Trimont Lodge, No. 249, 154 N.C. 97, 69 S.E. 764, 52 L.R.A., N.S., 823; Williams v. Branning Manufacturing Co., 153 N.C. 7, 68 S.E. 902, 31 L.R.A.,N.S., 679; Nelson v. Atlantic Coast Line R. Co., 157 N.C. 194, 72 S.E. 998, 52 L.R.A.,N.S., 829; Hargett v. Delisle, 229 N.C. 384, 49 S.E.2d 739; Brown v. Moore, 229 N.C. 406, 50 S.E.2d 5; Stephenson v. Piscataqua Fire & Marine Ins. Co., 54 Me. 55; W. H. Blodgett Co. v. Bebe Co., 190 Cal. 665, 214 P. 38, 26 A.L.R. 1070; Anno. 26 A.L.R. 1077 and 135 A.L.R. 80; Anno. 47 L.R.A.,N.S., 352; 3 A.J. 871, See numerous cases cited in notes.

At any time before an award is rendered under the contract, either party may elect to breach his contract, 3 A.J. 891, and seek his remedy in the tribunal provided by law, Carpenter v. Tucker, 98 N.C. 316, 3 S.E. 831; Williams v. Branning Manufacturing Co., supra; Tarpley v. Arnold, 226 N.C. 679, 40 S.E.2d 33; 3 A.J. 871, and "where the right of action is complete without an arbitration, an agreement is not taken out of the scope of the rule by an express stipulation that suit shall be subject to the condition that arbitration first be had." 3 A.J. 872.

The rule comes to this: The agreement of the parties to arbitrate is a contract. The relation of the parties is contractual. Their rights and liabilities are controlled by the law of contract. A breach of the contract may give rise to a cause of action for damages, but the contract itself is not a defense against a suit on the cause of action the parties agreed to arbitrate. Carpenter v. Tucker, supra; Sprinkle v. Sprinkle, 159 N.C. 81, 74 S.E. 739. In an action on the contract the courts will not decree specific performance of the agreement. Neither will they, by indirection, compel specific performance by refusing to entertain a suit until after arbitration is had under the agreement.

It is not amiss to note here that the courts uniformly recognize the difference between an agreement to arbitrate and a submission consummated by an award. After the agreement has been consummated by an award there can be no revocation. Nelson v. Atlantic Coast Line R. Co., supra; Williams v. Branning Manufacturing Co., supra; 3 A.J., sec. 41, p. 870. The award is binding on the parties and will be enforced.

It follows that the executory agreement to arbitrate controversies which might arise in the course of the fulfillment of the contract between the parties is no bar to this action.

The judgment overruling the demurrer is affirmed.