Opinion
September 27, 1948.
1. Arbitration — setting aside or modifying award.
The only grounds for setting aside or modifying an award by arbitration are those stated in the statutes, Secs. 290 and 291, Code 1942.
2. Arbitration — mistake of law or fact.
Unless arbitrators are restricted by the agreement of submission, the general rule is that they are the final judges of law and fact, and an award will not be reviewed or set aside for mistake in either.
3. Arbitration — submission in effect a compromise.
An agreement to submit a controversy to arbitration has the legal effect to make a compromise settlement of the matters in dispute and to merge the original causes of action into the written award and to make that the exclusive source of the rights and liabilities of the parties.
4. Arbitration — agreement liberally construed.
Articles of agreement to arbitrate and awards thereon are to be liberally construed so as to encourage the settlement of disputes and the prevention of litigation and every reasonable presumption will be indulged in favor of the validity of arbitration proceedings.
5. Arbitration — facts and figures shown on face papers.
When the question, whether a conditional sales contract is usurious, is submitted to an arbitrator and all the facts and figures are shown on the face of the papers so submitted the decision of the arbitrator is binding even if it be conceded that a court would and should have decided it differently.
Headnotes as revised by Smith, J.
APPEAL from the circuit court of Harrison County; L.C. CORBAN, J.
Mize, Thompson Mize, for appellant.
At the out set we are met with the maxim that every presumption will be made in favor of the validity of an arbitration proceeding, Stout v. Garrard and Company, 128 Miss. 418; 91 So. 33. The motion made by the defendant to set aside the award did not allege any fraud, corruption, partiality, or misconduct as is required under Section 290 of the Code and McClendon v. Stewart, 133 Miss. 253; 97 So. 547, holds that an arbitration award will not be vacated unless procured by corruption, fraud, or undue means, or with evident partiality, or corruption, or misconduct in refusing to hear material evidence, failing to postpone the hearing, or other prejudicial misbehavior of the arbitrators. The case of Jenkins v. Heagher, 46 Miss. 84, holds that an award can only be impeached by mistake, corruption, partiality, or gross misbehavior. The case of Wear v. Ragan, 30 Miss. 83, holds as follows:
"The question is whether the parties could in this way terminate their litigation. They could certainly agree, out of court, what decree the court might pronounce upon the matters put in issue within the jurisdiction of the court. And if they could do this, why could they not say that others might prescribe such terms in this particular as would be binding on them? There is not controversy as to the main fact. It is admitted that the submission was made; and the only objection is that it was not made under a rule of court. This, under the state of the case, we do not consider necessary. It is sufficient, under the case presented, that the award was such as could be made the foundation of the decree which was rendered."
A court cannot revise or alter the award unless for one of the grounds permitted by statute, Dederick v. Richley, 19 Wend. (N.Y.) 111; Wilson v. Williams, 66 Barb. (N.Y.) 209; Walworth County Bank v. Farmers Loan and T. Company, 22 Wisconsin 231; Peele v. North and South Carolina Railroad Company, 159 North Carolina 60; 74 Southeastern 592. The case of Riccomini v. Pierucci, 54 California Appeals 606; 202 Pacific 344, holds that an award may not be set aside because of a mistake of judgment as such errors are among the contingencies which the parties assume when they agree to arbitrate. The cases of Spang v. Mattes, 253 Pennsylvania 101; 97 Atlantic 1026; and Ogden v. Baile, 73 Florida 1103; 75 So. 794, hold that the award has the effect of judgment without any formal judgment by the court being entered. A very clear pronouncement of the law is found in the opinion in the case of Bollmann v. Bollmann, 6 South Carolina 29, wherein the court said:
"An arbitration proceeds from the consent of the parties. The court is but the instrument through which, in a pending case, effect can be given to their will. It contemplates an adjustment of their controversy by a forum not bound by the strict rules of law, but permitted within certain limits to substitute their own mode of investigation in the place of that through which alone courts of justice are allowed to exercise their functions. A ready ear is not given to objections raised by the disappointed party, who being dissatisfied with the result by the tribunal of his own selection, applies for the interposition of that which he had before renounced. To avoid an award, according to the decisions of our courts (and it is not necessary to go beyond them), the resisting party must show either corruption, misbehavior amounting to partiality, excess of authority, or such palpable mistake of facts as must satisfy the court."
It is the general rule that when a pending suit is referred to arbitrators by a rule of the court, and a valid award is made, the court can issue the judgment on the award as on the verdict of a jury, Alexandria Canal Company v. Swann, 5 Howard 83; 12 Law Edition 60; Mobile Bay Road Company v. Yeind, 29 Alabama 325; Buckhouse v. Hunter, 4 American Decisions 528; Strong v. Barbour, 1 Mackey 209.
In the case at bar, the defendant attempted to have the award modified and corrected, alleging that there was a miscalculation of figures, and as a result the court below vacated the award; however, the motion was to correct the award and to enter judgment for the defendant. This motion did not state what miscalculation was made, or what error was made, and the motion referred to the record rather than to the award. Any mistake must be in the face of the award and not in the record of the case. This cause was submitted to an arbitrator at the request and insistence of the defendant, and the issue to be determined by the arbitrator was whether or not the plaintiff was entitled to the immediate possession of the automobile, which had been seized under the Writ of Replevin. It was contended by the defendant that usury was charged by the plaintiff. It was contended by the plaintiff that he had two prices for the sale of automobiles, one a cash price and one a time price, and under the law of Mississippi it is perfectly legal to have two prices for the sale of automobiles, one a time price and one a cash price. This was settled by the Mississippi cases of Yeager v. Ainsworth, 32 So.2d 548 and Commercial Credit Company v. Shelton, 139 Miss. 132; 104 So. 75. This issue was submitted to the arbitrator who fully heard the matter, heard the law read thereon, and the arbitrator decided that under the law of Mississippi there could be a valid cash price and a valid time price, and he further found that no payments had been made to the plaintiff by the defendant, and that the plaintiff was therefore entitled to the immediate possession of the automobile, and he fixed the value thereof at $250.00. There is absolutely nothing in the award to show that any mistake was made, and there was no ground to modify the award. The award contains no calculations or figures, and it is not claimed that there was any mistake in the description of any person, thing or property.
Gardner Gardner, for appellee.
The defense rests upon the issue that the rate of interest charged in said contract is in excess of twenty per cent per annum. This computation is based on the figures and terms shown on the face of the contract. Section 36, Mississippi Code of 1942, reads in part as follows: ". . . If a rate of interest is contracted for or received, directly or indirectly greater than twenty per centum per annum, the principal and all interest shall be forfeited, and any amount paid on such contract may be recovered by suit."
Usurious interest is charged on the credit price. Without doubt there must have been a cash price for the car sold the appellee; but whatever the amount, it is irrelevant because the contract in this case and the appellant's declaration state and are based on only a credit price or "total time price." The appellant's declaration shows that he so construed the contract. In the second paragraph, the declaration states the total time price of $383.00, down payment of $94.00, and the balance of $289.00; "and the balance was due and payable with interest and carrying charges in twenty successive monthly installments, each installment being in the amount of thirty-one and 19/100 ($31.19) Dollars." The only logical interpretation of the contract and the declaration is that $383.00 is not a cash price but is a credit price as defined in the case of Commercial Credit Company v. Shelton, 104 So. 75, and the installments which total $374.28 include the appellant's computation of interest and carrying charges based on the balance due, $289.00 as stated in the declaration.
The figures in the contract clearly establish that this interest rate is in excess of twenty per cent per annum. The difference between $374.28, the aggregate of the installments, and $289.00, the unpaid balance of the total time price, is $85.28. This amount, $85.28, is twenty nine per cent of $289.00. Even if this exorbitant rate of interest is not obvious at a glance, the briefest computation will show $85.28 is more than twenty per cent of $289.00. However, the entire principal and interest were payable in twelve equal monthly installments within one year from the date of the contract of sale so the actual rate of interest is roughly doubled or fifty eight per cent (58%).
There is an evident mistake in the description of the case price and the time price recited in the award of the arbitrator as shown on the face of the record herein; and therefore there was an evident miscalculation of the figures on which the award was based because of which he found for the appellant.
The appellant cites cases establishing the point that every presumption will be made in favor of the validity of an arbitration proceeding. No question is made of this issue; the contention of the appellee is that this case is one squarely within the exceptions provided by statutes on the ground of evident mistake, in both figures and description. The case of Jenkins v. Meagher, 46 Miss. 84, is cited by the appellant as follows: "an award can only be impeached by mistake etc." In correcting a mistake of arbitration, the Mississippi Supreme Court in Robertson v. Wells, 28 Miss. 90, held: "The question is whether this mistake ought to be corrected. To this question there can be but one answer, and that is, whether the proof is clear that the mistake was made." The error in the case at issue as in the last mentioned case was primarily one of mathematics and the award of the arbitrator was correctly set aside for this reason in both cases.
Appellant contends that the award of the arbitrator was set aside only on the ground that there was an (evident) miscalculation of figures, that the motion to set it aside did not state what errors were made, that it is not claimed that there was any mistake in the description of any person, thing or property, and that the motion referred only to the record rather than to the award. Paragraph 2 of the motion of the appellee alleges: "There is an evident mistake in the description of the cash price and the time price recited in the award as shown on the face of the record herein." Code section 291 referred to above plainly states the motion may be made to modify or correct the award where there is either a miscalculation of figures or a mistake in the description of any person, thing or property referred to in the award. Both of these grounds for setting aside the award are separately shown in the motion; and the section relied on by the appellee does not require any further averment. Also the appellant maintains that the error must be on the face of the award. The foregoing section of the code clearly establishes that the award may be corrected for miscalculation or mistake in the figures or description of the person, thing or property referred to in the award. Therefore all of these objections made by the appellant to the power of the court to set aside the award are without merit; and it has already been shown in this brief in full detail the grounds on which the judgment for the appellee is based.
The appellant states several times that no usury is involved where there is a cash price and a time price. On that bare statement no issue is raised. But the appellee does maintain and has shown at length that usury can and has been charged by the appellant on the time price of $383.00 as designated by the appellant in the contract and his declaration. It has never been contended in any of the pleading in this cause that a usurious rate of interest may not be charged on a time price. And, as shown above, the down payment of $94 00 plus the total of the twelve monthly installments, amounting to $374.28, is $468.28 or $85.28 more than the appellant's time price. It is the difference between $468.28 and $383.00, the time price, that is the usurious interest in excess of 20% per annum which deprives the appellant of any cause of action by statute.
This case was originated by a replevin action in the County Court of Harrison County, involving the possession of an automobile sold to appellee, with title retained by the contract of sale, which contract was assigned to appellant by the seller.
Proper affidavit was made, and declaration filed. Defendant, appellee, filed a plea of the general issue and a "counter claim," by which latter he sought to have the car returned to him on the theory that the total interest contracted to be paid "was $85.28 which interest is far in excess of 20% per annum. Therefore the contract was null and void," and that the plaintiff could collect neither the principal nor interest thereon or assert any other rights thereunder.
The declaration alleged that the sale was for a total time price of $383.00, of which $94.00 was paid in cash "leaving a balance of Two Hundred Eighty Nine ($289.00) Dollars, and the balance was due and payable with interest and carrying charges in twelve (12) successive monthly installments; each installment being in the amount of Thirty-one and 19/100 ($31.19) Dollars."
In this state of the record, the parties, at the instance of appellee, agreed in writing to submit the matter to arbitration, which agreement contained a provision that, after the arbitrator had heard the matter, "the Court having jurisdiction of the subject matter, i.e., the County Court of Harrison County, Mississippi, shall render judgment on the award."
Appellant contended that the price of the car was on a credit basis, and it was legitimate to charge more on a time sale than for cash, as declared by this Court in Yeager et al. v. Ainsworth et al., Miss., 32 So.2d 548.
Appellee maintained the contract was usurious, and unenforceable by the authority of such cases as Dickey v. Bank of Clarksdale, 183 Miss. 748, 184 So. 314.
It was agreed by the parties that the arbitrator would hear the cause solely "on pleadings and exhibits to determine whether the Contract of Sale, upon which the suit was based, was usurious." After such hearing, and consideration of the briefs of counsel for the respective litigants, the arbitrator found that "there was a time price and a cash price, and that the said contract was not usurious" and awarded the car to appellant.
Appellant moved the County Court to confirm this award, which was, in effect, a motion for judgment thereon and in accordance therewith. The appellee made a motion to correct the award on the grounds that there was an evident miscalculation of interest; a mistake in the description of the cash and time price, on the face of the record; and that the rate of interest in the contract was in excess of 20%, thereby forfeiting all rights of plaintiff. The motion of appellee was sustained by the Court and judgment entered for appellee. On appeal to the Circuit Court, the judgment of the County Court was affirmed.
On appeal here, among the errors assigned are, the setting aside of the award of the arbitrator; and the entry of final judgment for appellee.
It is not proper or necessary for us to decide whether or not there was usury as a matter of fact, or an error of law, in the award by the arbitrator in this case. (Hn 1) The only grounds for setting an arbitration award aside, or of modifying it, are prescribed by statute. These grounds are — for vacating it — that it was procured by fraud, corruption or undue means; that there was evident partiality or corruption; that there was misconduct by the arbitrators in refusing to postpone the hearing on sufficient cause; or in refusing to hear pertinent or material evidence; or other misbehavior by which the rights of a party have been prejudiced. Section 290, Code 1942.
As to modifying it, there must be an evident miscalculation of figures; or an evident mistake in the description of any person, thing, or property referred to in the award; an award upon a matter not submitted, or not affecting the matter submitted; imperfection in some matter of form not affecting the merits of the controversy, and when, if it had been a verdict of a jury rendered in such court, the defect could have been amended or disregarded by the court. Section 291, Code 1942.
Both appellant and appellee based their arguments before us on the finality vel non of the arbitrator's award, in our jurisprudence. We are of the opinion it was final.
Appellee cites the early Mississippi case of Robertson v. Wells, 28 Miss. 90, to sustain his position on the issue of finality. In that case, the arbitrators, in computing time, made a mistake and awarded too much to the prevailing party, an error of computation or calculation. The award was set aside, under the statute, then substantially the same as now. However, in the case at bar, there was no miscalculation or erroneous computation.
The declaration here states that the deferred notes include interest and carrying charges. Conceding for the sake of the point, but not deciding, that the 12 notes for $31.19 total an amount in excess of the balance of the original price, and this excess is "interest and carrying charges," and usurious, contrary to the conclusion of the arbitrator, the courts of this State, neither by our statutes nor decisions, have been given or claim power to set aside the award of an arbitrator on grounds of error of law. The Robertson case, supra, on the contrary, was on a ground named specifically in the statute. So, it is not in point here.
There is no sustainable contention in the record that any of the statutory grounds, for vacating or modifying the award, exist. The assignment thereof in the motion of appellee in the County Court, sets out fully his reasons for claiming modification of the award. His contention that "there is an evident mistake in the description of the cash price and the time price recited in the award as shown on the face of the record herein," is not borne out by the facts. The 12 notes of $31.19 represent the balance of the original time price, to which has been added interest and carrying charges. There was no miscalculation or misdescription demonstrated. The mere fact, as already stated, that 12 times $31.19 amounts to more than the unpaid balance of the time price does not prove misdescription or miscalculation, as such difference is explained by the phrase, "including interest and carrying charges." If, in law, this excess should be conceded to be usury, that affords the court no power to set aside an award of the arbitrator, holding it not to be usurious. We find nothing in the record to justify our setting aside or modifying the award, under either of the statutes, supra.
The applicable general rule is announced as follows: "Errors of law or fact, or an erroneous decision of matters submitted to the judgment of the arbitrators, are insufficient to invalidate an award fairly and honestly made. Nothing in the award relative to the merits of the controversy as submitted, however wrongly decided, is ground for setting aside an award in the absence of fraud, misconduct, or other valid objections." 3 Am. Jur., Section 135, Award and Arbitration. The "other valid objections" in this State are defined in our statutes, and none are present in the case before us. Moreover, Section 147, of the same treatise, further declaring the general rule, says that (Hn 2) "Unless the arbitrators are restricted by the agreement of submission, the general rule is that they are the final judges of both law and fact, and an award will not be reviewed or set aside for mistake in either." There was no such restriction in the agreement of submission in the case before us.
Such is the law in Mississippi. In dealing with this topic, we have said that "the rights of the parties are narrower than in judicial trials, for there is no review or correction of errors of the judgment, either upon the law or facts, nor indeed would the arbitrators be absolutely barred by the strict law of the case. They might proceed altogether on views of what was right and just between the parties without following either the rules that would govern a court of law or equity in the circumstances. It is not legitimate, therefore in exceptions to the award, to inquire into the original merits in favor of one party or the other, or to show that in the evidence the award ought to have been different, or that the law of the case was misconceived or misapplied, or that the decision, in view of all facts and circumstances, was unjust." Jenkins v. Meagher et al., 46 Miss. 84.
(Hn 5) In the case before us, the matter of usury was the issue, involving a mixed question of fact and of law, on the submission to the arbitrator. This Court has heretofore dealt with such a situation. "Questions of pure law are sometimes directly submitted, as we think was done in this case in reference to the construction of the contract. In such cases, it makes no difference whether or not the arbitrators decide them as the Court would see fit to do. The award, whether it meets the view of the Court or not, is final and conclusive. The agreement of the parties is, substantially, that they will be bound by whatever the arbitrators declare to be the law between them, and by this agreement they are bound. Morse on Arbitration and Award, 314 and 315. As matters of fact are peculiarly within the arbitrators' authority, less hesitation has been manifested in treating as conclusive the finding of arbitrators upon facts, than their rulings upon the principles of law." Memphis Charleston R. Co. v. Scruggs, 50 Miss. 284.
Finally, we have held that (Hn 3) an agreement to submit the controversy to arbitration has the legal effect to "make a compromise settlement of the matters in dispute, including the matters in this suit; and the effect of this agreement was to merge the original causes of action and defenses into the written award and make that the exclusive source of rights and liabilities of the parties." Yarbro v. Purser, 114 Miss. 75, 74 So. 425, 427.
(Hn 4) Articles of agreement to arbitrate, and awards thereon are to be liberally construed so as to encourage the settlement of disputes and the prevention of litigation, and every reasonable presumption will be indulged in favor of the validity of arbitration proceedings. Furthermore, where parties regularly agreed to arbitrate their differences, and suit was filed on the award, the declaration alleging the material facts relating thereto, exhibiting the contract, the arbitration agreement, and the award, it was held to be error to sustain a demurrer to the declaration. Stout v. W.M. Garrard Co., 128 Miss. 418, 91 So. 33.
In view of the general rule in jurisdictions over the nation, the statutes of this state, and the decisions declaratory and interpretative thereof, as announced by this Court, we are constrained to reverse the judgment of the circuit court, and enter judgment here on the award as made by the arbitrator and in accordance therewith. The County Court should have entered such judgment, and the Circuit Court should not have affirmed the action of the County Court to the contrary.
Reversed and judgment for appellant.