Summary
In People ex rel. Union Ins. Co. v. Nash (1888) 111 N.Y. 310, 315, 18 N.E. 630, 2 L.R.A. A. 180, 7 A. A.S.R. 747, the court held that it would consider that such an agreement was revocable under New York statutes recognizing common-law arbitration "until its nature is changed by legal enactment."
Summary of this case from Park Construction Co. v. Independent School DistOpinion
Argued October 16, 1888
Decided November 27, 1888
Treadwell Cleveland and Norris Morey for appellants.
S.P. Nash and James E. Carpenter for respondents.
William Allen Butler for respondents.
The position taken by the appellants, with respect to the agreement of arbitration in question here, is that the character of revocability, inherent in such submissions, is affected by that article of the agreement, which provides against any revocation and expressly waives and abandons the right to revoke. They do not dispute the common-law rule that submissions to arbitration are revocable in their nature, and, indeed, that such was the rule is too well established and recognized by early and late English cases, and by the New York statutes and decisions to admit of dispute. ( Allen v. Watson, 16 Johns. 205; Bank v. Widner, 11 Paige, 529; 2 R.S. 544, § 23; Tobey v. County of Bristol, 3 Story, 800; Vynior's Case, 8 Coke, 81 b. [4th vol. of Frazer's ed. 302]; Marsh v. Bulteel, 5 B. Ald. 508; Re Rouse v. Meier, L.R., 6 C.P. 212; Fraser v. Ehrensperger, L.R., 12 Q.B.D. 310.) Whatever may have been decided elsewhere in this country, we are satisfied that that is the better rule of law which has been recognized in England and in this state, and which considers a submission revocable, until its nature is changed by legal enactment, as was done by English statutes. As it was said in Vynior's Case ( supra), "man cannot by his act make such authority, power or warrant not countermandable, which is by the law or its own nature countermandable;" he cannot "make that irrevocable which is of its own nature revocable."
But the learned counsel for the appellants say the facts underlying this submission, in the discontinuance of suits, the abandonment of advantages and the peculiar and unusual agreements contained in this submission, by which the right to revoke is waived and abandoned, take it out of the common law, or statute rule. They say that here was an express waiver of the right to revoke, based on a valuable and executed consideration, and they argue that failing the reason of the rule, the rule itself fails.
No unusual character is imparted to the agreement by its being based on such a consideration. All such agreements must be based on a good consideration, and if the discontinuance of the pending suits and the loss of advantages thereby occasioned, are the features which constitute the executed consideration, they are but the incidents of the agreement of submission. That was the decision of this court in McNulty v. Solley ( 95 N.Y. 242), where DANFORTH, J., collects authorities to sustain the proposition that by submission to arbitration, eo acto, the discontinuance of the pending litigation is affected. The flaw in the argument of appellants' counsel is in its assumption that the character of the mandate to the individuals, selected to determine the controversy between parties, can be changed by their private agreements, or affected by the circumstances which were its producing cause, or which the execution of the agreement induced.
The source of the mandate or power, by virtue of which the arbitrators act, is in the private agreement which the parties have entered into, for reasons satisfactory to themselves, in order to have an end to dispute and to legal strife, and the force of the mandate to them is in the consent of the parties that they shall act. But in the execution of the power, or in the thing they are to accomplish, the arbitrators have no interest, and thus the case is altogether different from one where the mandatory has an interest in the execution of the power and in the result of its exercise. In such a case the mandate, which goes forth with the execution and delivery of the agreement to the mandatory, becomes irrevocable. We are at a loss to understand how the nature of the agreement between the parties, or any resulting incident of that agreement, add anything to the power of the arbitrators. The agreement of submission is executory, until the controversy is completely ended between the parties by the submission to the arbitrators of the controversial facts for their decision; and not till then can it be said that the agreement has been executed and has passed beyond the power of the parties to withdraw from or to break. Until that ultimate stage has been reached, every article of the agreement, which relates to the future conduct of the parties, lies in the region of promise, and that promises can be and are broken, regardless of their weight or the consequences, is as proverbial as it is certain.
The express agreement not to revoke is executory, of course, like every other agreement to do or not to do a certain thing. Although the parties agreed not to revoke, the fact is that one of them has done so, notwithstanding his agreement, and the other is left to such legal remedies as may offer themselves, to protect or compensate him for the breach. The agreement to waive any right to revoke does not help the situation. A waiver, to be effectual and beyond recall, must be of some present existing right, conferred by statute or otherwise. When the agreement to waive relates to the future conduct of the party, it is merely executory and amounts to nothing more than the agreement not to revoke. The difficulty is that as the arbitrators have no interest in the result of the arbitration and derive their power to act from the continuing consent of the parties to the agreement, when the agreement, while yet executory, is broken by the refusal of a party to be bound by it or to perform it, the foundation of the arbitrator's power is gone and they have no more authority over the withdrawing party to bind him by their acts.
The legislature of this state in enacting section 2383 of the Code of Civil Procedure have set at rest any existing conflict in the decisions and have enlarged the rule as recognized in the previous statutory enactment (2 R.S. 544 § 23.) By its provisions a submission to arbitration, whether made as prescribed in that title or otherwise, may be revoked at any time before the closing of the proofs and the final submission of the cause for decision. The revocation must be in writing, signed by the parties and delivered to the arbitrators, and it is competent for one of several parties on a side to effect such a revocation. We perceive no reason for qualifying the force of this section in the way suggested by appellants' counsel, who say that it is only available to a party when revocation is allowable, and as, by express agreements in this submission, the right of revocation was stipulated away; the provisions of the section are inapplicable. We think the language of this section is broad enough to cover all cases of submission, and that the only restriction is as to the time and the mode of the act of revocation. And as to the agreement not to revoke, as we have suggested, like any other agreement relating to the future conduct of parties, it was executory, and, if broken, left the other party helpless thereunder, and under the necessity to seek redress for the breach elsewhere.
We have preferred to express our views upon the main conflict as to this submission, in view of its importance, and, while doubting the power of the court to compel by writ of mandamus the performance by these arbitrators of their functions, we do not now express any opinion upon that question.
For the reasons expressed, we think the order of the General Term, affirming the order of the Special Term denying a motion for a peremptory mandamus, should be affirmed, with costs.
All concur.
Order affirmed.