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• McCormick v. Gray et al. should be made against either party, the amount of such award shall be taken out of the moneys going to the party against whom the said award shall be made, and paid over to the party in whose favor the said award shall be made; and when said award shall have been paid, the balance of said moneys going to said McCormick and Gray, if any there shall be, shall be paid over to them, respectively, in the proportion in said assignment provided; whereas, in and by the fourth section of the said award, it is awarded and directed, that of the balance of the money and assets of said firm, as profits, after paying the items therein mentioned, there be paid to said Ogden and Jones one fourth part, to said McCormick one fourth, and to said Gray. the remaining two fourths; and no sum certain is awarded to either party within the intent and meaning of the said assignment and submission, but the assets of the said firm are directed to be distributed and divided as last aforesaid.
4th. That the said arbitrator has exceeded his powers in other respects, and the said award is uncertain, unjust, illegal, and tends to the manifest injury, wrong, and oppression of your ora. tor; and your orator humbly insists and submits that the said award ought to be annulled and wholly set aside, and the said Gray ought to be enjoined and restrained from commencing any suit or other proceeding to enforce the collection thereof, or from interfering with said assignment aforesaid, or intermeddling with the property and assets in said assignment mentioned ; and that the said Gray ought to come and account with your orator of and concerning the said partnership dealings and transactions from the commencement thereof; and that the said pretended award, so made as aforesaid, is no bar to such account.”
The defendants appeared, and demurred to the bill; and the Circuit Court, then holden by the district judge, sustained the demurrer and dismissed the bill.
The complainant appealed to this court.
It was argued by Mr. Johnson, for the appellant, and submitted, on a printed argument, by Mr. Butterfield, for the appellee.
Mr. Johnson, for the appellant, made the following points:
1. That the averments in the bill gave the court jurisdiction over the parties and the subject.
2. That the award, being beyond and against the terms of the submission, was void. Archer v. Williamson, 2 Harris & Gill, 68; Adams v. Adams, 8 N. Hamp. 82; Carnochan v. Christie, 11 Wheat. 446; Lyle v. Rodgers, 5 Wheat. 394.
3. The award being out of the way, the bill presents a familiar case for discovery and relief, being by one partner against
McCormick v. Gray et al. another for an account and settlement of partnership transactions; an averment, of itself, vesting the court with jurisdiction, and entitling the complainant to relief. 1 Story's Eq. sect. 450, 672, 683; Scott v. Pinkerton, 3 Edw. Ch. Rep. 70.
Mr. Butterfield, for the appellee, made the following points:
1. The first point made by the respondent upon this appeal is, that there is nothing in the case to show that the matter in controversy, or the difference between what the appellant is entitled to under the award and what he would be entited to if the award should be set aside and a new account should be taken, is sufficient in amount to sustain the jurisdiction of the court.
2. The complainant, by appiying to the court below, and obtaining leave to amend his bill after the allowance of the de. murrer, waived the right to appeal from the decision of the court, allowing the demurrer; and no appeal lies to this court from a decision of the court below, refusing to amend. The dismissal of the suit was a necessary consequence of the neglect of the complainant to amend within the sixty days allowed to him by the court, and no appeal lies from that decision. Wright et al. v. Lessee of Hollingsworth, 1 Pet. 165; Matheson's Ad. ministrator v. Grant's Administrator, 2 How. 263; Read v. Hod. gens, 2 Mol. Rep. 391.
3. The award of the arbitrator was not an excess of power in any respect, and was not inconsistent with the spirit of the assignment of the debts of the firm to William B. Ogden, as trustee.
4. The courts, in support of the validity of an award, will make every reasonable presumption in favor of its being certain and final, as a determination of all the matters in dispute; especially whien, as in this case, the award states that the arbitrator has examined and considered all the matters in difference between the parties, and that the award is intended to be a final settleinent of all such matters as were submitted to the arbitrator. Wood v. Griffith, 1 Swanst. Rep. 43; Doe ex dem. Madkins v. Horner, 8 Adol. & Ellis, 235 ; Smith v. Demarest, 3 Halst. Rep. 195; 9 Adol. & Ellis, 522; 3 Greenl. Rep. 421 ; 6 New Hamp. Rep. 264 ; 1 Leigh, 491 ; 9 Wend. 649; 2 Johns. Ch. Rep. 551 ; 2 Bay, Rep. 370; 2 New Hamp. Rep. 179; 1 Dall. 174, 188.
5. An award cannot be set aside, either at law or in equity, except for errors apparent on its face, misconduct in the arbitration, or for some palpable mistake, or on account of the fraud of one of the parties. And nothing dehors the award can be pleaded or given in evidence. to show that it is unreasonable or unjust. Hunch v. Blair, 1 Johns. Ch. Rep. 101; Shepherd v. Mer.
McCormick v. Gray et al.
rill, 2 Id. 276 ; Todd v. Barlow, Id. 551 ; Heard v. Muir, 3 Rand. Rep. 121, 128; Shermer v. Beale, 1 Wash. Rep. 11; Plesants v. Ross, 1 Id. 157; Administrator of Schenck v. Cuttrell, 1 Green's Ch. Rep. 297; Strodes v. Patton, 1 Brock. Rep. 228.
The bill in this case, which seeks to raise a question as to the decision of the arbitrator, that the complainant should, out of his share of the profits of the partnership, pay the defendant an amount equal to the one half of the defendant's share thereof, transferred to Ogden and Jones, by reason of the neglect of the complainant to supply his portion of the capital of the firm, pursuant to his agreement, cannot be sustained; for the award estops the complainant from alleging any thing contrary to it. Garr v. Gomez, 9 Wend. 649.
6. If a part of the award is invalid, as being contrary to the provisions of the assignment, that does not render the whole award void, but only so much thereof as is inconsistent with the provisions of the assignment, will be rejected, leaving the residue of the award in full force. Taylor's Administrator v. Nicolson, 1 Hen. & Munf. 67; McBride v. Hagan, 1 Wend. Rep. 326; Bacon v. Wilber, 1 Cow. 117; Martin v. Williams, 13 Johns. 264; Cox v. Jagger, 2 Cow. 649; Gordon v. Tucker, 6 Greenl. 247; Lyle v. Rodgers, 5 Wheat. 394.
Mr. Justice CURTIS delivered the opinion of the court.
This is a bill for an account of certain partnership transactions betwen McCormick and Gray, and to set aside an award by which that account has been stated. The bill was demurred to, and, by a decree of the Circuit Court of the United States for the District of Illinois, it was dismissed, and the complainant appealed.
The demurrer raises the question, whether the award is valid ? The objection to the award is, that it is not pursuant to the submission. To decide this question, it is necessary to examine the terms of the 'submission and the award. The submission is contained in arbitration-bonds, mutually executed by the par. ties, bearing date on the 20th day of December, 1848, submitting, generally, all their partnership and other differences with this limitation : “ Provided, that the award so to be made by said arbitrator shall not in any way alter or affect the demands of property and assets in the hands of William B. Ogden, as the trustee of said parties, or the agreements between said parties, relative to the collection and disposition of said demands, assets, and property; but the same shall remain under the pro
tiesets, and piel contract.bmission refer of the part
This clause in the submission refers to an assignment of the principal part of the choses in action of the partnership, in trust
McCormick v. Gray et al.
to collect them, made by the partners before the execution of the submission-bonds, which assignment recites the fact of the submission, and contains agreements as to marshalling this part of the partnership assets. Amongst other trusts declared in this assignment are the following:
“ 1st. Said Ogden shall proceed to collect said. assets as speedily as may be, and, after first paying all expenses, costs, and commissions attending the collection and disbursement of the same, he shall pay over to said McCormick the sum of $14,610, on account of patent fees due him for the manufacture of said Virginia Reapers, as aforesaid.
“ 2d. To pay all legal liabilities and debts of said McCormick and Gray as they shall become due.
" 3d. The balance of said assets, as fast as collected, shall be paid in pro rata sums, as follows, - to said McCormick, one half of all moneys collected; to Ogden and Jones, one fourth part of said moneys, being the amount heretofore sold and assigned by said Gray to them; and the remaining one fourth part to said Charles M. Gray. Provided, however, and it is hereby expressly understood and agreed between the said McCormick and Gray, that the respective sums herein provided by this clause, to be paid to said McCormick and Gray, respectively, shall be retained by the said Ogden, to await the award of Judge Dickey, in the submission 'above referred to, and shall in no case be paid over by him to either of said parties until said award shall be made; and when said award shall be made, in case it shall be made against either party, the amount of such award shall be taken out of the moneys going to the party against whom said award shall be made, and paid over to the amount thereof, to the party in whose favor said award shall be made; and when said award shall have been paid, the balance of said moneys going to said McCormick and Gray, if any there shall be, shall be paid over to them, respectively, in the proportion hereinbefore provided for. Provided, further, that, if said Gray shall not pay to said McCormick, within thirty days from the date hereof, the sum of $2,500, on account of the indebtedness of Gray and Warner to said McCormick, then the said Ogden shall retain and pay over to said McCormick, out of the rest of the moneys to be paid to said Gray, as aforesaid, after first paying any award which said judge may make in the submission above mentioned, against said Gray, the aforesaid sum of $2,500, on account of the said indebtedness of said Gray and Warner, aforesaid, together with ten per cent. damage thereon, as a penalty for any delinquency on the part of said Gray, to pay said sum of $2,500 within the time above limited, every thing hereinbefore contained to the contrary notwithstanding; and the said Gray agrees
McCormick v. Gray et al.
to furnish the said McCormick, within the thirty days aforesaid, a full, true, and correct account or statement of the indebtedness of said Gray and Warner to said McCormick ; and any excess over and above the said sum of $2,500, which said account or statement shall show to be due to said McCormick, shall also be paid to him by said Gray, within the thirty days above limited, or, in default thereof, the said Ogden shall pay the same out of the same funds, in the same manner and with the like penalty that the said sum of $2,500 is hereinbefore provided to be paid."
These stipulations, by which this part of the partnership assets is disposed of, are, in legal effect, incorporated into the submission, and limit the authority of the arbitrator. He could do nothing to alter or affect them. But, instead of observing this limitation, his award treats the entire property of the partnership, and the respective rights of the partners, as if no such agreements had been made.
He postpones the payment of the fourteen thousand six hun. dred and ten dollars to McCormick, for his patent fees to the payment of the debts of the firm, though the agreement of the parties was, that it should be first paid out of the choses in action assigned. It is argued, that this was justified by the prior right of creditors. But, as between the partners, they had a perfect right to control the possession of the partnership funds, and determine that the whole, or any part, should go into the possession of either partner. Both are ultimately liable for the debts, and whether one or other member of the firm shall have possession of the funds, either under a claim as a creditor of the firm, or otherwise, while they act in good faith, is a matter wholly subject to their control. Indeed it is only through them, and by means of their equity to have the partnership property applied to the payment of the partnership debts, that creditors have any lien on, or specific rights to, the property of the firm, as distinguished from the property of its members. Ex parte Ruffin, 6 Ves. 119; Ex parte Fell, 10 Ves. 347; Ex parte Williams, 11 Ves. 5.
This partnership was solvent, and the object of the submission was to adjust the relative rights of the partners. The pay. ment of the debts, and a provision for them out of the partnership funds, was probably necessary, in order to make a final settlement, without recourse over, in consequence of payments compulsorily made by one partner, which might disturb the balance between himself and his copartner. But it certainly was not within the authority of the referee to make this provision out of a fund which the partners had otherwise disposed of by an express agreement, which they made part of