Parsons v. Ambos

Lamar, J.

In a contract for the exchange of land the parties agreed that each should be let into possession of the respective lots, and that the value should be immediately fixed by appraisers. Each party entered. One appraisement was had, and it was set aside by mutual consent. A second appraisement was attacked by bill in equity, and finally set aside by a decree at the instance of Parsons, the plaintiff in error. In the meantime the umpire died. Subsequently Parsons elected to revoke the submission, and to rescind the contract, offering to surrender the land received by him, and demanding possession of the lpt into which Ambos'had been let. This demand having been refused, Parsons brought equitable ejectment, praying for rescission, for injunction against further action by the arbitrators, and, in the alternative, praying, if the court held he was not entitled to such relief, that a decree be entered, fixing the value of the respective lots, and adjusting the rights of the parties. This petition was met by a demurrer which raises the question as to whether the contract •amounted to an agreement to oust the courts of jurisdiction; whether the agreement to submit to appraisers was revocable at the election of Parsons, and, if not, whether the same was not revoked as matter of law, in view of the death of the umpire and the fact that the previous finding had been set aside by a decree.

Courts favor the submission of controversies to speedy and inexpensive tribunals of the parties’ own selection, and generally, in the absence of fraud or palpable mistake, will not interfere with their findings, even though a verdict of a jury to the same effect might be set aside as contrary to law.. But the underlying reason for the recognition of the award is found in the fact that the parties not only agreed to submit their differences, but voluntarily permitted the agreement to be executed, and consented for the award to be actually made by judges of their own selection. The mere executory agreement to submit is generally revocable. Otherwise nothing would be easier than for the more astute party to oust the courts of jurisdiction. By first making the contract and then declaring who should construe it, the strong could oppress the weak, and in effect so nullify the law as to secure the enforcement of contracts usurious, illegal, immoral, Or contrary to public policy. Civil Code, §3668. A common-law ' agreement, therefore, to submit the validity and effect of a contract, or to submit all matters in dispute, to arbitration, may be revoked by either party at any time before the award. (For statutory awards, see Civil Code, §4486.) Some of the early cases put this rule upon the ground that a provision whereby the courts may be ousted of their jurisdiction is repugnant to that other provision, implied in every contract, that its validity and effect shall be determined by the courts and the law of the land. But whether predicated on the idea that the agreement is repugnant .to the contract, or to public policy, the principle is universally recognized that such general submissions are revocable. But this does not mean that nothing can be submitted, nor that the parties may not stipulaté that certain facts must .be determined by those of their own choosing. For example, in building contracts it is manifest that there must be some one other than a court or jury to pass on the question as to whether there has been a com-* pliance with the specifications as the building proceeds, or to determine whether the work shall be accepted or rejected as completed^ Hence,.there may'be a lawful and irrevocable stipulation for the certificate of the architect or engineer. In contracts of insurance the assessment of the amount of damages may be made a condition precedent to a suit by the insured on the policy. So too in contracts of sale, the parties may stipulate for the opinion of an attorney as to the validity of the title, or that the value of the property shall be ascertained by appraisers before either has the right to sue.

This fixing of values, however, is a mere incident, and not of the substance of the contract. It rather serves the office of evidence, than of a finding which construes the contract or determines rights. The jurisdiction of the courts over these substantial matters may be retained by revocation though the incidental stipulation for a valuation is not revocable by the act of the parties, each of whom is bound to do all that is reasonably in his power to procure the appraisement, and must continue to act until he puts the opposite party in the wrong, or makes it manifest that no suitable person can be obtained to do the service within a reasonable time. Hood v. Hartshorn, 100 Mass. 121. Yet, while this stipulation can not be revoked by the act or fault ' of a party, it may be revoked by operation of law. For example, the appraisement must be made within the time named, or within a reasonable time. The submission may be revoked by the refusal of the appraisers to act; by the death of a party, or by the death of an appraiser or umpire; and, where there is no agreement for resubmission, it may also be revoked by the failure of the appraisers to agree, or when an award, actually made, is subsequently set aside by a decree. See Black v. Harper, 63 Ga. 752 (3); Evans v. Sheldon, 69 Ga. 113. And this is true for the reason that the validity and effect of such agreements depends on the consent of the parties and the terms of the contract.- The courts have no power to order a resubmission where the contract itself makes no provision therefor. What is said in Hood v. Hartshorn, supra, must be construed in the .light of the peculiar facts of that case. There the arbitrators failed to agree. One refused longer to serve. Subsequently he reconsidered and agreed to act. One of the parties contended that the time had gone by, and-that under the circumstances he was not bound further to attend, and that a revocation resulted. It is true, however, that some of the reasoning of the court is to the effect that a fair interpretation of the contract required reasonable effort to obtain suitable arbitrators yrho would agree. If, however, this case be treated as sustaining the contention of defendant in error, the general rule is to the effect that the failure to agree, refusal to act, or death of a party, arbitrator, or umpire, operates to revoke a • common-law submission, and, under such circumstances, the court 'possesses no power to compel the parties to select other arbitrators, though, if the revocation is brought about by death or the act of the law, neither of the parties can be made to suffer there-' for. Schreiner v. Cummins, 63 Pa. St. 375 (9, 10); Sutton v. Tyrrell, 10 Vt. 91 (death of umpire); Wolf v. Augustine, 181 Pa. St. 576; Potter v. Sterrett, 24 Pa. St. 412.

But the implied revocation applies here only to that incidental-, provision in the contract providing a means for the ascertainment of the value of the land, — not to a rescission of the contract itself, nor could the death of the umpire or the decree setting aside the award defeat the rights of the parties, or the equity each had in the land to be conveyed whenever the price was settled. Neither . could either of the parties rescind the contract. ' It had been, partly performed, possession had been taken, each had the right, to improve the land held, there may have been a change in value, and this change may have been unequal in degree, the market price of one lot may have risen and that of the other declined. It would be inequitable to permit either to rescind because the appraisers failed to agree, or because the appraisement made was. set aside, or because the umpire died. The demurrer, therefore, to so much of the petition as sought a cancellation of the contract and a recovery of the land by Parsons was properly sustained ; but the case should have been retained, for the sole purpose of fixing the value of the lots and entering a money decree in favor of the party entitled thereto. Leonard v. House, 15 Ga. 473; Kaufmann v. Leggett (Pa.), 58 Atl. 129 (3).

Judgment reversed.

All the Justices concur.