LAFLIN ·v.carcaGO, W. '" N. BY. CO.
CHICAGO, W. & N. :&1:".:CO.'
(Oircuit Oourt. E.
Decembei 10. 1887.)
In proceedings to recover damages for the construction of a railroad across P!emisesused:as a summer resort, plaintiff having shown by keepers. of .simIlar resorts that the proximity of the road would in their opinion impairlhe business of the hotel, defendant' offered to prove by witnesses who kept hol tels near the tracks and' depot grounds of other railroads that .hotels were not injuriously affected thereby. Held, that the testimony was irrele. vant. to ABATEMENT AND REVIVAL-AGREEMENT TO ARBITRATE. A mere ell'6cutory agreement to arbitrate entered into by parties to a proceeding to recover damage!! to land resulting from the construction ofa rail: road, does not abate the suit, or work a discontinuance, where no submission halpbeen actuallytnade, and no arbitrators actually chffilen; and this is especilllly so where, the party setting up the agreement as a bar has gone. to trIal without objection upon the merits.
At Law. This Wal\ a proceeding for ascertaining the damage to certain premises situated in Waukesha, Wis., owned by the plaintiff, and alleged to have been injured by the construction of the defendant's foad across the same. Connected with said premises was a hotel, kept bythe plaintiff for the accommodation of summer guests, known as the "Fountain House," with its appurtenances; which included a mineral spring, and pleasure grounds, and drives for the use of guests. On the trial the plaintiff called witnesses .engaged in the summer hotel business at other points and places, to testify whether, in their opinion, based upon their experience in such business, the construction and proximity of the defendant's railroad would have an injurious effect upon the business and patronage of the Fountain Hous,e. In reply to this testimony the defendant called witnesses who were engaged in the business of conducting and managing hotels situated near the tracks and depot grounds of other railroads;, and it was sought to show by such witnesses that the proximity of their hotels to railroads had no injurious effect upon the business of such hotels. It was admitted by counsel for the defendant that it was not intended to call for the opinions of such witnesses in relation to the probable effect ofthe construction of the defendant's railroad upon the business of the Fountaill House; the object of the defendant being simply to show that the hotels kept by the witnesses in other places were not injured by their proximity to railroads. This testimony was ob· jected toby. counsel for the plaintiff,. as inadmissible, on the ground that the tendency and effect of it would beto introduce into the case collateral issues not Pertinent to the issue here to be trled, which related solely to the effect upon the Fountain House of the-construction of the defendant's railway. The defendant introduced in evidence an agreement entered into by the part1es to the commencement of the suit.
See 33 Fed. Rep:
to arbitrate their differences; and it was contended by counsel for the defendant that this agreement of arbitration operated to discontinue or abate this suit. D. H. Sumner and J. V. Quarlea, for plaintiff. J. G. Flanders, H1tgh Ryan, D. S. Wegg, and Howard Morris, iur defendant.
DYER, J., (afte:r 8tating the above.) When the plaintiff was making his case he offered the testimony of several witnesses to show what effect, in their judgment, the construction and proximity of the railroad would or might have upon the business and patronage of the Fountain shown to have been long acquainted and House. The witnesses experienced in the business of keeping summer hotels. supported by a class of patrons \limilar to those which the testimony' tends to show are received as guests aUhe Fountain House, and appeared to be qualified to speak upon the subject to which their examination related. The testimony referred to, was, of course, offered as bearing, in its ultimate effect, upon the question of the value of the property for summer hotel purposes after the railroad was built across the plaintiff's land. The admission of thistestiIilony was contested with much force by counsel for the defendant, but the court waa unable to see why, within the doctrine of the cases on the suJ:>ject decided by the supreme court of this state, it was not admissible. The only doubt I had was whether the matter inquired about was the proper subject of expert testimony. There may be doubt UpOJ;l that point, but so much has the law in relation to the competency of such testimony, as.s.pplied to varioUs subjects, been extended, or its scope hroadened,by niodern authority, that it· seemed to me when the question came up that the doubt ought to be resolved in favor of the admission of the testimony. I have given a good deal of thought to the question. since, because, if testimony was improperly admitted, I would not hesitate to strike it out before submitting the case to the jury; this. being held to' be proper practice,and to cure the error of original admission of i"mproper testimony, by the· supreme court of the United States. But, after Ciireful reflection, my conviction still is,the testimony was admissible. . Now, the defendant offers the testimony of witnesses,-gentlemen engaged in the Summer hotel business, and understood to be experienced in that business,-by which it is sought to show that they have kept hotels in even nearer proximity to ra.ilroads than is the Fountain House to the defendant's road,and that the business of such hotels has not been injuriously affected by that fact. The question is, is this testimonyadmissible? It is not prejposed to show this merely as establishing the experience of the witnesses in the summer hotel business, and then to follow it with an expression of opinion from.the witnesses as to whether the business of the.b'oulltain House is likely to be diminished by the construction of the defendant's railroad. This is admitted. But the object of the proposed testimony is simply to sbO'" that the business of other summer hotels is not injured by their proximity to a railroad.
CHICAGO,W. '" N. RY. CO.
Clearly, this would be introducing into the case what might prove to bea new and independent issue, foreign to that we have to try, namely, all. issue in relation to the business, situation, and surroundings of other hotels, and all the various circumstances under which business is transacted in them. There are exceptional instances where this is allowable, such as cases involving matters of science, art, or questions of professional skill. But the cases are rare which allow independent collateral factE to be drawn into the issue. The question is, is the fact sought to be proved, namely, the effect of the construction of a railroad upon other hotels, a fact relevant to the issue, which is one inyolving the Fountain House? I think it is not. If the evidence proposed to be introduced is admitted, it must be that the plaintiff would have the right to rebut it, and then the defendant might have the right to reply to the testimony in rebuttal, and thus we should be engaged in a trial of the question as to other hotels, an independent collateral fact not germane to the principal issue we are trying. It is the duty of the court to allow the defendant to do in support of its contention jUgt what it has allowed the plaintiff to do in support of his theory of the case, that is, to call witnesses who may show themselves qualified to speak on the subject from experience in the summer hotel business; to give to the jury their opinion and Judgment as to whether the construction of this railroad will injuriously affect the patronage and business of the Fountain House. This the defendant has the right to do, and such testimony will be admitted. But .to testimony offered only to show the effect of the construction or proxhIlity Or operation of a railroad upon other hotels, the objection must be sustained. I do not think there is any issue of fact arising ,upon the arbitration agreement for the court to submit to the jury. So far aa the agreement cuts any figure in the caEle, the effect which it shall have is purely a question of law. There is no dispute that the parties entered into this (lgreement; nor can it be disputed that hy mutual forbearance the time for the selection of arbitrators under the agreement was extended. There were, for a considerable time, continued negotiations between the parties, with reference to the, contemplated arbitration and the selection of arbitrators; and it must be held that by mutual conseut the, time for making such selection and entering upon the arbitration was extended. There is no evidence in tl;1e case that either party, by express notice to the other, before this case was noticed for trial, revoked the arbitration agreement. Therefore, I t1;J.ink thewhole.que8tion resolves itself into the point whether the court, as matter of law, should hold that the execution of the arbitration agreement operated the present action, or as a bar to its further prosecution. It is counsel for the defendant that the execution of this agreement, which has bel:ln aptly characterized as a purely executory agreement, worked a discontinuance of this suit. The material'provisions of the arbitration agreement are as follows: ,"First. The' first party hereto. [Laflin.] and D. S. Wegg. general solicitor of s,aid second party, shall jointly on the 1st day of July after the execution.
, I!1IDERAL' REPORTER.
nomlnate;three Secona.All three of said ar. competent. Of conntyof Said meet at atitp,e and place in said WaukEisha county to days' notice in writing having been pteviously given to ea,eh of the parties hereto of the time and placeofsiddmeeting; said 'time,; hoWever, to be pdOI: to July 1, 1l:l87, and may adjtlUrlI frOID time to time until: the bearingl'ifthe'matter submitted to tbem is concluded. Fourth.Ris ihereby,m utually agreed that the only qnestjon to be submitted to sucbar!;>it'iat.ors is as to theamoutlt9,f money which said first party is entitled to receive, and Sllidsecondparty shall be bound tQ pay to said first party" for arid ,as e<llupensation for tpe taking by said seco,lid party of said strip, belt, 'orparceldf laM described 'in said award, and for the damages 'OCcasioned by the taking thereof, and that such compensation alid damages shall be 'estimated aso! ;the date of the payment of said award into the habdsof the clerk of. the ,circuit court for Waukesha county; and that said first party shall interest upon such compen:;;ation and f,rom Fifth., bearing each, of, the J?l'rties. hereto be represented by counsel, and shall be allowed one, day for the IntroductIOn of ltod' at the conclu'!iion'of the evidence one day shall be allowed for atgUltiehts, 'to be apportioned in such manner 'as suchatbitrators may deem proper; and at the conclusion of said arguments the said arbitrators shall make theirdecislQn as the matter submitted to them. in writing, to be signed, ;byat least two of .,sai!,! arbitrators, and,shallpotify each party ,thereof, and the, decision of any two of said arbitrators so made shall be binei'ing. Sixth. The hereto do hereby mntually bind themselves, their heirs, executors, administrators, successors, and assigns, to abide by the decision of the arbitJratorsmadeas herein provided, and within ten days after notice of such decision to make such Payments orrestitutions in the premises as shalJ.be required thereunder, and to,dismiS$ of record all appeal!! frpm the said award." Now, while it maybe conceded to be the law that an actual submission of a controversy to arbitration operates as a discontinuance of a pend. ing suit betweeilthe partiesinvolving the same oontro\"ersy, I should certainly very much doubt, ifthequestion were an original one, whether a mere agreement to arbitrate iIi the future would have that effect. Let us examine with some care the authorities that have been referred to in the very able argument of Mr. Flanders. All that need be said of the case of Muckeyv. Pierce, 3 Wis. 307, is that it was there heill that the submission of a case to arbitrator/> b)' the parties works a disconHnllance of the suit. It appears from the Eltatement of facts ill the caSe that the arbitrators were actually chosen; that the matter in controversy ,vas submitted to them, and that they, met together to cOllshler the matters in issue in pursuance of the submission. In the opinion of the court it wns said that the rooson why the suLmission of the caUse toarbitrntors had the effect to discontinue or dismiss the suitwnsthat the parties had chosen another forum fOl the detemlination of the matters in controversy be.;. tween them j and the court in which the suit waS pending at the time of the submission 'would not pl'oceed further with the case, but leave the patties to the tribUlml they'had created for There, as it thus appears, the forUln hOO been created, the tribunal had been ()rganized,and proceedings bad bElcnactually taken by the parties in pur· suance of the submission befortdhat tribunaL In the case of Bigelow
LAFLIN ,.11. CHICAGO, W. & l". RY. CO.
GoBS, 5 Wis. 421, the parties hail agreed to submit the matters involved in the suit to th,e decision of a person who was named and agreed upon as arbitrator; .and it was stipulated that one of the parties, who had obtained a judgment against the other, was not to prosecute his judgment, or in any manner make u.se of it. It was held by the court that the bitration agreement as made, worked a discontinuance of all proceedings upon the judgment, for the reason that the parties had chosen a tribuna:! other than the court, in which to settle and adjust their contruversies. There, as we .see, the arbitrator was choset-land de.signated; the tribunal was created before which the parties were to come for the final dispositionof their dispute. Such being the facts of that case, it does not seem to me that it is I:\n authority which goes to the extent contended; namely, that such as we have in the case at bar, nothing having been done under the agreement, no arbitrator having been chosen, works a discontinuance of the suit. The case of Thornton v. Woolen Mi7h,41 Wis. 265, was one where the parties agreed upon a settlement of the controversy between them. A settlement was made, and, of course, that worked a discontinuance of the pending suit between them involving the same controversy. In the opinion of the court, Mr. Justice LYON says "Had this whole controversy been submitted to arbitrators, and had the arbitrators awarded that the parties should do precisely what they have done, there can be no doubt that the submission and award ... ... ... would have worked a discontinuance of the action." Dock Co. v· A88Urance Co., 5 Pac. Rep. 232, cited by counsel for the defendant, was a suit upon a fire insurance policy, wh,ich contained a condition that incase of loss and a difference of opinion a8 to the amount of damage, the .same .should "be submitted to two disinterested and comconclusive and binding on both parpetent men, whose award shall ties.". The court held this to be a condition precedent, and that therefore the party who had sustained a loss could not maintain a suit upon the policy, regardless of this condition. We all understand the distinction between a condition precedent and it lIlere collateral agreement, and the court, in it.'! decision in the (',ase cited, simply enforced that tiou, by holding thnt the condition precedent must first be complied with. The case. of State v. G"hamber of (kmwwrce, 20 Wis. 63, only holds that. actual submi$sion of a matter in controversy between the parties to tho arbitration of a committee of the chamuer of commerce operated as a discontinqance of a suit at law .pending between the parties involving the same contro,,·ersy. Hills v. Passage, 21 Wis. 298, was a case of a reference of a cause for trial to the judge of the court, and it was held that such a reference, although not a valid statutory reference, hll:d the effect of.a submission to arbitration, and therefore worked a discontilluarwe. of .the pending· action between the parties. Bank v. TrustGb., 22 Wis. 231, was like the case just noticed,where there was anacttial reference of a cause by submission to the judge of the court in which it wasperiding, and in which such a reference was held to work suit. will be readlly observed, none of the cases referro<lto, hold pere agreement, like that in the case at bar,
to submit a controversy to an arbitrator at some future time,-the agreement being thus purely executory, no submission having been actually made, and no arbitrator having been actually chosen,-is sufficient to abate or to work a discontinuance of a pending suit between the parties to such agreement, involving the same controversy. Now, there are some other cases to which the attention of the court has been called on the argument, whioh are to the effect that even if a mere agreement to arbitrate could have the effect upon a pending suit contended for by counsel for the defendant, if the party who wishes to insist upon the discontinuance does not in the outset do that, but proceeds without objection intne trial of the case on the merits, that is a waiver of the right to olaim that a discontinuance has resulted from the arbitration agreement. In People v. Common Pleas, 1 Wend. 314, it was held that :the submission of all suits and controversies to arbitration is a discontinuance ofa·sttit pending in court. But a party may waive such discoutinuanca.byappearing at the trial of the cause anti. defending the same. In the opinion, SUTHERLAND, J., says: "The party who might have Insisted on the discontinuance, was competent to waive it; and in this case it was waived by the defendant's counsel appearing on the trial, cross-examining the plaintiff's witnesses, and addressing the jury." To the same effect are the cases ofPaulison v. Halsey, 38 N. J. Law, 488, and Smith v. Barse, 2 Hill. 387. My conclusion is that the making of this arbitration'agreement-nothing having been done by the par.ties under it-did not work a discontinuance of this suit. But if the court is wrong in that, I am inclined to think that the discontinuance has been waived by the acts and conduct of the defendant in proceeding to a trial of the case and contesting it upon the merits. There are other authorities to which reference should be made, which hold as matter of settled law thllt a mere agreement to refer a dispute to arbitration cannot he set up as a defense in a suit at law; in other words, that the jurisdiction of a court cannot be ousted by a mere agreement to refer to arbitration, and that'such an agreement cannot be set up in bar of an action, a.fter it has been entered into. In th e case' of Tobey v. County of Bristol, 3 Storj" 800,' one of the questions was whether the representatives of a county had actually made an agreement to submit a certain question to arbitration. Upon that qnestion, Mr. J nstice STORY was in doubt whether the commissioners of the county had taken such proceedings as legallybound the county. After considering the question he says: "But suppose it to be otherwise, and here there was a real contract or agreement, not conditional, but absolute, on the part of the commissionel's to refer the claims to at'bitration, can' such an agreement be enforced by a court of equity? No case can be found,as I believe. and, at all events,no case has been cited by QOllllsel, Or has fallen within the scope of my researches, in which ,an agreement to refer a claim to arbitration has ever been specifically enforced in equity. So far as the authorities go, they are altogether the other way. The cases are. divided into two classes,__one where an agreement to refer to arbitration has been set up as a defense to a suit at law as well as in equity; ,the oliher, where the party as plaintiff has sought W enforce such an agreement
CHICAGO, W. & N. RY. CO.
in a court of equity. Both classes have shared the same fate. The courts have refused to allow the.former as a bar or defense against the suit, and have declined to enforce the latter as ill-founded in point of jurisdiction." This is the statement of the law on the subject, as made by Mr. Justice STORY. And the same adjudication, substantially, was made by the court in the case of Campbell v. Insurance Co., 1 MacArthur, 246, where it is said (page 257 :) "It is not to be denied that a mere agreement between the parties that any future differences growing out of their contract shall be decided by arbitrators or referees thereafter to be chosen, will not be allowed by the courts to oust their jurisdiction." .The court then proceeds further in the opinion to point out the distinction between a mere agreement to arbitrate, and an actual submission to arbitration. In Thompson v. Charnock, 8 Term R. 139, Lord KENYON said: "It is not necessary now to say how this point ought to be determined if it were res integra,.it having been decided again and again that an agreement to refer all matters in difference to arbitration is not sufficient to oust the courts of law or equity of their jurisdiction." in Street v. Rigby, 6 Vest 821, Lord ELDON said: "It is enough for me to say it is 1I0t a necessary consequence of a covenant to refer that the party thereby agreed to forbear to sue. I do not enter into the question of the effect at law of a covenant to forbear to sue. But, supposing it good in strict law, it cannot be maintained that, having covenanted to refer, a party has covenanted to forbear to sue; and, if not, he has only left himself open to an action for damages if he does not refer; which the suit does not prevent, if thought desirable." Further,in Mitchell V. Harris, 2 Vest Jr. 129, it was held that aeovenant to refer to arbitration only entitles to damages, but is no barto a suit or action. A mere agreement to refer to arbitration, where no referEmce has taken place, cannot take away the jurisdiction of any court. Tl:>'>Je authorities, I think it must be conceded, entirely dispose of the proposition here urged, that during the pendency of this arbitration agreement the plaintiff could not have brought a suit against the defendant to determine the controversy between them, and that neither of the parties could prosecute the appeal taken from the award of the commissioners in the first instance. For the reasons stated, the court is of the opinion that this arbitration agreement cannot be used by the defendant as a defense, either in bar or in abatement of this suit. v.34F.no.11-55
(Oirw,it Court, No D.,nZmoia.
10' FAOTORS .AND' BROKERS-FACTOR'S ,LIEN-AGREEMENT TO
Farlow, a dealer in live-stock at Marshall, Mo., shipped live-.stock to the de· fendants, live-stock brokers at Chicago', which wete purchased by Farlow 'with money advanced him therefor by the plaintiffs, bankers s,t the place shipment in Missouri. Farlow drf;tw;dr.afts on thede,fendants, payable .to the plaintiffs, on each shipment. and all drafts so drawn were honored. excepting thelast one, involved in this suit. This draft was dishonored, the defend.'l.yIng a large part. of t.h . 0.' cee.ds. Of,the last Sb. Ipmep.t o.n 11.11 old Cia.IIll .. a.ntsapp against Farlow. claiming a,factor'a ,lien., The plain,tiffs in this suit claimed tlilttthe defends,nts had orallY agreed with them to honor all Farlow's drafts drsWil on' shipments, 'and that on the faith of such'agreement they advanced the money to Farlow to purchase the cattle. which agreement the defends,nts denied. .The PJIaintiffs claiPlfil,d, regardless. of such agreement, tbat the defendants ,knew that the cattle were purchased with money advanced by the plaii1tilfs to Farlow. mid that, if such agreement was made,the fendants· wete' liable.
If the cattle. were purchaslld by Farlow with money obtained from the plaintiffs with the agreement that the-plaintiffswere to be paid for their advances . on such oattleout of the proceeds;of the same when' sold ,by the defendants as Farlow':s brokers, and that ,the. defendants. knllw of such agreement twee.n lj.nd the plaintiffs"thell thedefendaIlts,as :F;arlow's broke.rs. had no nght to apply any part of the proceeds of said cattle to the paymeut of th'e debt of Farlow to the draft'was fully paid.
SAME-NOTICE OF ADVANCES ON SHIPMENTS.
And such ia the law, whether such knowledge on the part of the defendants was actual or c()Dstructive, the question being whether the defenlilantsknew that adv&Ilcesfrom the, plaintJtIs upon these cattle, and had appropriated the proceeds of the cattle to the paymell.t of those by the draft. 1lfotheyhad: such knowledge, they had no rIght. to. approprIate own debt agllinst Fa,rlow.. Such knowlthese proceeds tp the edge might be derived .expressly, or frpm the course of business between the parties theretofore, or from the'defendants' knowledge of Farlow's' financial ability, or otb,er preWlant facts. . ,
At Law. FlolJ)e1', Remy & Hol8tein, fOJ: plaintiffs. Prank P. Sebree, H. Musgrave, JOB.A. Sleeper! and Thea. G. defendants.
BLODGE'1'T, J., (charging jury.), . This suit is brought upon an alleged agreement by the defendant to pay a draft of $H,274, drawn JuLy 13, 1886, by one George Farlow, payable to the plaintiftk The plaintiffs, at the time of the fransaction in question, were bankers at Marshall. in the state of Missouri. The defendants were live-stock brokers at the stock-yards in the city of Chicago. The plaintiffs' position is substantially this, as plaintiffs' proof tends to show: that on or about the last of March or the first of April. 1886, the defendants, by William Hall. one of the copartners, agreed with the plaintiffs that if they (the plain1
Reported by Messrs. Flower. Remy
Holstein. of the Chicago bar.