Opinion
(June Term, 1864.)
1. Parol evidence is admissible to show what matters are submitted to arbitration and what matters are brought to the notice of the arbitrators.
2. An award is avoided by a mistake in law by an arbitrator as to what is submitted to his decision. But when arbitrators act within the bounds of their authority, their decisions on questions of law and of fact are binding on the parties, unless the arbitrators acted corruptly or committed gross errors.
ACTION of debt on award, tried before Heath, J., at Fall Term of ORANGE, 1863.
It appeared on the trial that the plaintiff and defendant, on 23 March, 1859, chose John U. Kirkland and John Berry to settle a dispute between them by arbitration, and executed an instrument under seal, of which the following is a copy:
"Know all men by these presents, that James R. S. Walker and Sally Walker, both of the county of Orange and State of North Carolina, acknowledge themselves indebted in the sum of $5,000 to any person suing for the same, good and lawful currency of North Carolina, for which we bind ourselves and our heirs and assigns. In testimony whereof we set our hands and affix our seals, this 23 March, 1859.
"The condition of the above obligation is such whereas James (256) R. S. Walker and Sally Walker have agreed to leave a matter of dispute to referees, as they cannot settle it themselves, viz., John U. Kirkland and John Berry; they are their referees to settle the matter in controversy. James R. S. Walker having his letters examined on trial with other testimony. Sally Walker having the privilege to produce testimony on the trial to rebut the evidence in said letters, with the understanding that the said James R. S. Walker is to leave the mills which are in dispute, surrender to Sally Walker the mill key and leave within ten days after this paper is signed. Then, after the referees hearing the testimony on both sides shall decide that James R. S. Walker is entitled to damages, whatever the damages shall be laid at, the said Sally Walker is to pay to the said James R. S. Walker; but should the referees find, upon examination, that Sally Walker is damaged, instead of James R. S. Walker, then the said James R. S. Walker is to make it good to Sally Walker, whatever it be."
The arbitrators found that the plaintiff had removed from Tennessee to this State, at the solicitation of the defendant, and in expectation of pecuniary advantages promised by her, and that he had suffered a loss thereby of $500, and that he was not indebted to her on the mill books or otherwise, and they award that she pay him $500, and that he deliver to her the mill books. The plaintiff proved the performance of what he was required to do, both by the deed and the award. The defendant contended that the arbitration had been corruptly conducted, and as evidence of this allegation showed that she had offered evidence before the arbitrators of a battery committed on her by the plaintiff, whereby she insisted she was greatly injured, which the arbitrators refused to hear. The plaintiff contended that this matter was not submitted to arbitration, and offered to show that the only matter submitted was a question of damages alleged to have arisen from the plaintiff's having (257) removed from Tennessee to North Carolina because of promises made by the defendant to him, which were alleged to have been broken. To the reception of this evidence the defendant objected, on the ground that as the submission was by deed, parol evidence could not be given to show what was submitted. The judge permitted the evidence to go to the jury, reserving the question of its competency, and giving leave to the defendant to move to enter a nonsuit in case he should be of the opinion that the evidence offered by the defendant was competent. Under the instructions of the court, the jury found a verdict for the plaintiff for the amount awarded and interest. The defendant moved to enter a nonsuit according to leave given. The court refused the motion and gave judgment for the plaintiff upon the verdict.
Fowle for plaintiff.
Phillips for defendant.
It is a general rule that where an arbitrator does not make his award upon all the matters submitted to him, the award is entirely void; and the defect may be shown as a defense to an action on the award. Watson on Arb. and Award, 59 Law Lib., 121. But where the submission is of all matters in difference, or of all disputes, without specifying them, the arbitrator may make his award only of such things as he has notice. Yet the award is good. Ibid. How can these rules be made of any practical benefit to parties unless parol evidence is admissible to show what matters were within the terms of the submission, or were brought to the notice of the arbitrator? That such evidence is admissible for such purposes was directly decided by this Court, in Brown v. Brown, 49 N.C. 123. Indeed, on the trial of the very case now before us, the presiding judge, notwithstanding the submission was in writing, admitted parol evidence on the part of the plaintiff to (258) show that a certain matter was the only one submitted to the arbitrators; and it seems to us that upon the same principle the defendant ought to have been permitted to offer testimony to rebut that of the plaintiff, by showing that another matter was embraced within the terms of the submission, and was not acted on by the arbitrators.
But it is contended by the counsel for the plaintiff that the testimony offered by the defendant and rejected by the court was irrelevant, because it could tend to prove only that the arbitrators had committed a mistake in a matter of law, which, if so, would not hurt their award. That is true, if the mistake be committed when the arbitrators are acting within the scope of the authority conferred upon them, and upon matters within that scope. But it cannot be so as to an error in law, by means of which they are induced to embrace within their award a matter not submitted, or reject one which was submitted to them. See 1 Green. Ev., sec. 78. What are the terms of the submission, what is the true construction of such terms, and what things are embraced within them, may present questions of law or of fact; and when presented the questions can only be decided conclusively, not by the arbitrators, but by the proper judicial tribunals of the country. But when the arbitrators are acting within the bounds of their authority, and only within those bounds, then they are the judges of the parties' own selection, and their decisions on questions of law and of fact are binding on the parties, unless it can be shown that the arbitrators acted corruptly or committed gross errors or mistakes in making their award. See the same section of Greenleaf on Evidence.
His Honor having erred in rejecting the testimony offered by the defendant, the judgment must be reversed, and a
Venire de novo. (259)
Cited: Walker v. Walker, 61 N.C. 546; Osborne v. Calvert, 83 N.C. 371; Cheatham v. Rowland, 105 N.C. 222; Patton v. Garrett, 116 N.C. 858; Millinery Co. v. Ins. Co., 160 N.C. 141.