Karthaus v. Yllas/Opinion of the Court

by Robert Trimble

This was an action of debt, brought by Francisco Yllas, and Josef Antonio Yllas, against Charles W. Karthaus, on an arbitration bond, in the Circuit Court of the district of Maryland.

The defendant, after oyer of the condition of the bond, pleaded, no award made, &c. The plaintiff replied, setting forth the award in haec verba, and assigning a breach; the defendants demurred generally, and the plaintiff joined in demurrer. The Circuit Court having given judgment, upon the demurrer, in favour of the plaintiffs; the defendant has brought the case up, by writ of error, for the consideration of this Court.

The first and principal ground relied on by the plaintiff in error, for the reversal of the judgment, is, that the award is not agreeable to the submission, in this; that two several distinct controversies, the first between the plaintiffs and the late house of Charles W. Karthaus & Co., and the second between the plaintiffs and Charles W. Karthaus, individually, were submitted to the referees, and that they left the latter undetermined. The condition of the bond, after reciting, that certain disputes, differences, and controversies have arisen, and are still depending between the above bound Charles W. Karthaus, acting for his late house of Charles W. Karthaus & Co., and for himself and the above named Francisco Yllas y Ferrer, and Josef Antonio Yllas, &c., 'refers the same to the referees named, and their umpire, and binds the said Charles W. Karthaus, &c. to abide by and perform their award;' so as such award, &c. 'of the arbitrators, of and in the premises, be by them made and given up in writing, under their hands and seals, ready to be delivered to each of the said parties in controversy, in fifty days.'

The arbitrators, and their umpire, within the time limited by the submission, made and delivered their award in writing, under their hands and seals, in the following words, to wit: 'We, the undersigned, Henry Child and Lewis Brantz, as arbitrators, and Michael M'Blair, as umpire, acting in virtue of the annexed bond, or instrument of writing, do hereby award and adjudge, that the late firm of C. W. Karthaus & Co. pay to Francisco Yllas y Ferrer, and Josef Antonio Yllas, or their representatives, the sum of fourteen hundred and seventy-five dollars, for the balance of the general account current between the parties, and also the sum of thirteen hundred and ninety-eight dollars, for a balance arising out of moneys received for the brig Arogante Barcelonese, and cargo; in which award, a parcel of cutlasses, or their proceeds, are considered as becoming the property of the said Yllas y Ferrer.'

It is plainly seen, from the face of the award, that the arbitrators have not contradistinguished between Charles W. Karthaus, as a member of the late house of Charles W. Karthaus & Co., and Charles W. Karthaus, as an individual, unconnected with his late house. The argument is, that this omission of the referees vitiates the award. It is said that this, being a conditional submission, ita quod, the arbitrators were bound to pursue the submission strictly, and to award, of and concerning every matter referred to them. In support of this argument, the counsel referred to Randall vs. Randall, 7 East, 80, and several other cases less apposite.

That there is a class of cases in the books, in which arbitrators have been held to a more than ordinary strictness in pursuing the terms of the submission, and in awarding upon the several distinct matters submitted, upon the ground of the submission being conditional, ita quod, is conceded. The case of Randall vs. Randall is a leading case of that class. Lord Ellenborough, C. J. in delivering the opinion of the Court, says: 'The arbitrators had three things submitted to them; one was to determine all actions, &c. between the parties; another was to settle what was to be paid by the defendant for hops, poles, and potatoes, in certain lands; the third was to ascertain what rent was paid by the plaintiff, to the defendant, for certain other lands. The authority given to the arbitrators, was conditional, ita quod, they should arbitrate upon these matters, by a certain day. The arbitrators have stopped short, and have omitted to settle one of the subjects of difference stipulated for.'

This case was adjudged, according to the rule laid down in the books; that if the submission be conditional, so as the arbitrator decide of and concerning the premises, he must adjudicate upon each distinct matter in dispute, which he has noticed. Kyd, 177.

But the rule is to be understood with this qualification; that in order to impeach an award, made in pursuance of a conditional submission, on the ground only of part of the matters in controversy having been decided, the party must distinctly show, that there were other points in difference, of which express notice was given to the arbitrator, and that he neglected to determine them. Caldwell, 105. Kyd, 177. Cro. Car. 216. Baspole's case, 8 Co. 98. Ingraham vs. Milnes, 8 East's Rep. 445.

That Lord Ellenborough understood and intended to apply the rule, as thus qualified, in Randall vs. Randall, is manifest. For Mr. Espinasse, in commenting upon Baspole's case, having observed, that it is said in that case, that though there be many matters in controversy, yet if only one be signified to the arbitrators, he may make an award for that, for he is to determine according to the allegata et probata-and it is in every day's practice, that an award may be good in part, and bad in part. Lord Ellenborough, in answer to that argument, replies-'That is, where it does not appear there is any notice to the arbitrator, on the face of the submission, that there is any other matter referred to him, than those which are mentioned to him at the time of the reference. But here it does expressly appear, that there was another matter referred, on which there is no arbitrament.' In this case, it is not pretended that any notice was given to the arbitrators of any other matter, unless that notice was given on the face of the submission.

The question then is, does it distinctly appear, from the face of the submission, that any other point of difference between parties, was submitted, and of which the submission itself gave the arbitrators notice, but which they have neglected to determine.

If, as the argument supposes, there was any point in difference, which concerned Charles W. Karthaus, individually, as contradistinguished from the points in difference which concerned him as Charles W. Karthaus, of the late firm of Charles W. Karthaus & Co., what was that point of difference?

No satisfactory answer has been given, and it is believed none can be given, to this inquiry. How then can it be maintained, that a distinct point in difference between the parties was referred, and by the reference itself notified to the referees, which they have neglected to determine? The case of Ingraham vs. Milnes is a strong authority to show, that although the submission be conditional, ita quod; there must be a distinct specification, as in Randall vs. Randall, to sustain the objection, that part has been omitted by the arbitrators. Here the submission is in very general, and, we think, in very vague and ambiguous terms. It speaks of disputes, differences, and controversies, between Charles W. Karthaus, acting for the late house of Charles W. Karthaus & Co., and for himself and the plaintiffs. But how, or in what he acted, for the one or the other, is not specified. The terms 'late house,' imply the former existence, but present non-existence, of the late house of Charles W. Karthaus & Co. He may be the only surviving partner, the firm having ceased, by the death of the other members. But if the firm was continuing, Charles W. Karthaus, while he must be admitted to be perfectly competent to submit to reference his own interests in the firm, could not, by his submission, bind his partners. He might bind himself to perform whatever the award directed the firm of which he was a member, to do; so that, either way, it was a submission of his own interest only. In order to overturn the award, it is not enough that he may have had different and distinct interests in his individual and in his partnership character. It is a settled rule, in the construction of awards, that no intendment shall be indulged, to overturn an award, but every reasonable intendment shall be allowed, to uphold it. Thus, if a submission be of all actions, real and personal, and the award be only of actions personal, the award is good-for it shall be presumed no actions real were depending between the parties. Kyd, 72, and Baspole's case, before cited.

So in this case, although the submission speaks, in general terms, of disputes, differences, and controversies, with Charles W. Karthaus, acting for his late house of C. W. Karthaus & Co. and for himself; it shall not be intended there were any controversies with C. W. Karthaus, individually, other than those decided by the arbitrators. If any such did exist, inasmuch as they are not specifically and distinctly set forth in the submission, so as to give notice to the arbitrators, it was the duty of the party to show, by averment and proof aliunde, they were brought before the referees.

There is no analogy between this case and Lyle vs. Rogers, 5 Wheat. 394, cited at the argument. In that case, it was decided, that where claims against a party, both in her own right, and in her character of administratrix, were submitted to arbitrators, it was a valid objection to the award, that it awarded a gross sum to be paid by her, without distinguishing between what was to be paid by her in her own right, and what in her representative character. The Chief Justice, in delivering the opinion of the Court, explains the reason and ground of the decision, by observing, 'if this award was made against Mrs. Dennison, as administratrix, she would not only be deprived by its form, of the right to plead a full administration, (a defence which might have been made before the arbitrators, and on which their award does not show, certainly, that they have decided;) but also of the right to use it in the settlement of her accounts, as conclusive evidence, that the money was paid in her representative character. If this objection to the award is to be overruled, it must be on the supposition that it is made against her personally; yet the statement of facts shows the claim against her to be in her representative character.' This reasoning cannot apply to the case before the Court. It is of no sort of consequence to C. W. Karthaus, whether he is directed to pay as Charles W. Karthaus, individually, or as Charles W. Karthaus, of his late house of C. W. Karthaus & Co. In each case he is bound, personally, to pay, having bound himself so to do by the submission; and the award, if in any case it would be evidence for him against the firm, would not be conclusive, as he had no power to bind his partners, if any existed, by his submission. It is objected that the award is not certain, final, and mutual. It was said, in argument, that as the first sum awarded, is expressed to be for a 'balance of the general account current, between the parties; the general account current, must be understood to include all accounts between them; and hence, that the second sum awarded, for a balance arising out of moneys received for the brig Arogante Barcelonese, is included in the first, and the party thus twice charged; or at least, that it does not certainly appear otherwise.' We think there is no foundation for this argument. To indulge such a supposition, would impute either manifest injustice, or gross negligence, to the referees. Great stress was laid, in the argument, on the uncertainty of the closing clause of the award, in these words, 'in which award, a parcel of cutlasses are considered as becoming the property of said Yllas y Ferrer.' There is considerable doubt and uncertainty, as to the meaning of the arbitrators, in the use of these terms. And had this uncertainty appeared in any part of the award, intended for the benefit of the defendant, it would, perhaps, be fatal to the whole award. Had that been the case, it would be hard and unjust, to compel him to perform that part of the award which is onerous to him, when he could not have, on account of its uncertainty, that which would be beneficial to him. But, however doubtful the precise intent and meaning of this part of the award may be, it is certain, it was intended as a benefit in some way, to Yllas y Ferrer, over and above the two sums of money directed to be paid to the plaintiffs. The defendant can have no reason to complain that the plaintiffs, or either of them, may not, on account of this uncertainty, be able to obtain all the benefits intended by the award; nor can it furnish any reason for withholding from them, that to which they are certainly entitled.

It is deemed a sufficient answer, to the objection of want of mutuality in the award, to remark, that great stress was laid, in the early cases, upon the mutuality of an award; but at present, it is by no means considered necessary that each party should be directed to do, or not to do, any particular thing, Cald. 113. Two had submitted to an award; nothing was awarded as to one party, but that all actions should cease. The Court held it a good award, Harris vs. Knight. 1 Levz, 58.

In Palmer's case, 12 Mod. 234, one party was directed to pay money to the other, without any directions being given to the latter in any way; and, again, it was awarded that A should pay B 40 shillings for a trespass; Freeman, 204. The respective awards were considered unimpeachable. These cases fully establish the principle above laid down. An award is regarded as final, when it is an absolute conclusive adjudication of the matters in dispute; and there is no reason to doubt the conclusiveness of the adjudication in this case, as to the two sums of money directed to be paid; and that the award will operate as a bar to any future litigation, upon the accounts for which they are given. Again: It is objected that the award directs an act to be done by strangers. This objection grows out of the direction in the award, that 'the late firm of C. W. Karthaus & Co. pay, &c.' Whatever might be the force of this objection, if it were true in point of fact, we cannot so regard it. So far as appears upon the record, the late firm or house of C. W. Karthaus & Co. and C. W. Karthaus are one and the same person; or more properly speaking, it does not appear that there is any other person, in esse, belonging to that firm, than C. W. Karthaus himself. If there be any other person, in esse, of the late house of C. W. Karthaus & Co. it cannot be truly affirmed that he, and the house of which he was a partner, are strangers to each other. But we cannot, consistently with the rules of law, presume or intend there is any other; indeed, in support of the award, it may reasonably be intended there is not, as the party objecting was cognizant of the fact, and might have shown it, if true, but has not. The direction that the late firm of C. W. Karthaus & Co. shall pay, unquestionably includes C. W. Karthaus; and no other person appearing to exist, it is equivalent to a direction that he shall pay. This reason is applicable to the last ground assumed by the counsel for the plaintiff in error, for a reversal of judgment; namely, that the replication is insufficient, because, in assigning a breach, it only alleges C. W. Karthaus had not paid. As no other was, or could be bound by the submission and award, to pay, and he was bound; it was a sufficient assignment of a breach of the condition of his bond, to allege that he had not paid the money, awarded in favour of the plaintiffs.

Upon the whole, it is the opinion of this Court, that there is no error in the judgment of the Circuit Court, and the same is affirmed, with costs and damages.

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