This is an action for damages, alleged to have been sustained by the plaintiff, through the wrongful acts of the defendant, in erecting a dam across Enoree River, thereby causing the overflow of his lands. The plaintiff also asks equitable relief, by way of injunction.
The defendant, to whom A.B. Groce subsequently assigned his rights under said contract, denied all the allegations of the complaint, except the corporate existence of the defendant, and plaintiff's ownership of the lands that were overflowed; and set up as a defense, the following contract:
"State of South Carolina, Spartanburg county.
"This contract made and entered into, this 27th day of February, 1900, between W.H. Jones (and other parties therein named) and A.B. Groce, witnesseth. *Page 272
"The said W.H. Jones (and others), for valuable consideration, hereby made unto the said A.B. Groce, his heirs and assigns, the right and privilege to raise a dam on the Van Patton Shoals * * * to such height as he may desire. It is further agreed, that if the lands of the said parties above named, become in any way injured or damaged, by water from said raising of the dam, * * * the said A.B. Groce binds himself * * * to pay the amount of such damage, to the said parties above named. * * * The amount of such damage shall be arrived at and determined, in the following manner, to wit: The said W.H. Jones, (and others), * * * are to select one arbitrator, * * * and the said A.B. Groce * * * the other, and these two, a third; and if these two can not agree on a third, then such third arbitrator is to be selected, by the clerk of Court, and if he will not, then the probate judge, and if he will not select, then the third arbitrator shall be selected by the sheriff, and if, for any reason, the arbitrators can not be chosen, or a majority of them can not agree, then the amount of such damage, is to be determined by action at law. The award of said arbitrators shall be final and conclusive." * * *
After setting forth the terms of the contract, the defendant alleged, "that the plaintiff has no right to make or have fixed any claim to damages, save and except as is provided, by the terms of the contract aforesaid."
The plaintiff, in reply, alleged failure of consideration, fraud, and that he revoked the agreement to arbitrate, before the commencement of the action.
The notice served on the defendant, by the plaintiff, dated July 18, 1907, uses this language:
"You will, also, take notice, that even if said paper (the contract) be declared valid, the undersigned, W.H. Jones, does hereby revoke, any and all agreement or agreements to arbitrate, mentioned in said paper." *Page 273
The question raised by the exceptions is thus stated, in the argument of the appellant's attorneys:
"There is only one question made, as we understand it, by the several exceptions of the plaintiff, which is succinctly embraced in the plaintiff's first request to charge, which was refused by his Honor, and which was as follows:
"`The notice of revocation served on July 19, 1910, revoked the agreement to arbitrate, and it was no longer in force. The jury, therefore, having nothing to do with anything about the arbitration.'
"His Honor refused this, and charged, in effect, that the plaintiff was bound by the provisions of the paper referred to, unless it was obtained by fraud, and quoted at length from the case of Hamilton v. Insurance Co., 136 U.S. 254, telling the jury that the principles announced in that case, were applicable to this case, provided the paper was not fraudulent. The Court further charged: `If you find that this paper was not obtained by fraud, then the plaintiff has no cause of action, because before he can bring his suit, he must have his damage ascertained by arbitration. If you find that this paper was not obtained by fraud, you will find for the defendant; if you find that this paper was obtained by fraud, as I have endeavored to explain the law to you on that subject, then you will find for the plaintiff, such a sum as represents his injury, if any has been proven.'"
"Where the parties to a contract, enter into an absolute agreement, or covenant, that in case a dispute should arise under such contract, all matters in difference between them relating thereto, shall be submitted to arbitration, it is void on grounds of public policy, because, to give effect to it, would be to oust the Courts of their jurisdiction." 2 Encyc. of Law, 571.
The appellant's attorneys do not dispute this principle, but contend for the doctrine, which is thus stated in 3 Cyc. 595: "Though the parties cannot, by any agreement to submit, oust the jurisdiction of the Courts, they may agree to *Page 274 impose, as a condition precedent to any right of action, that, with respect of the liability to pay, the mode of settling the amount to be paid, or the time for paying the same, an arbitration shall first be held."
In the first place, the provision in said contract, for submitting the amount of damages to arbitration, is not a condition precedent, and his Honor erred in applying to this case, the principle announced in Hamilton v. Insurance Co.,136 U.S. 254. In the said case, (upon which his Honor principally relied), the facts were very materially different, from those in the present case. The policy therein provided, that any difference arising between the insured and insurer, as to the amount of loss or damage thereunder, should be submitted, at the request of either party, to certain persons as arbitrators, to be chosen in the manner therein provided, whose award should be conclusive, as to the amount of loss or damage only, and should not determine the question, as to the liability of the company, and that until such an appraisal, should have been permitted, and such an award obtained, the loss would not be payable andno action would lie against the company.
"In order to make such award (under arbitration provided for in policy) a condition precedent, to the right of maintaining suit, it must be so expressed in the policy, or necessarily implied from its terms. A mere provision in the policy, that the amount to be paid, in case of disagreement, shall be submitted to arbitration, does not prevent the insured, from maintaining an action, unless the policy further provides, that no action shall be maintained, until after award; but such agreement to submit to arbitration, is regarded as a collateral and independent agreement; the breach of which, while it will support a separate action, can not be pleaded in bar to an action, on the principal contract."Mutual F. Ins. Co. v. Alvord, 61 Fed. Rep. 752.
We do not deem it necessary, to cite other authorities to show, that the provisions of the contract herein, do not *Page 275 constitute a condition precedent. But even if there was a condition precedent, it would not bar the plaintiff's right to bring his action, until there was a compliance with the requirements thereof.
In an exhaustive note to the case of Chadwick v. Phoenixetc. Association, 8 A. E. Ann. Cases, (Mich.) 170, it appears that the authorities are in irreconcilable conflict.
There are cogent reasons why the doctrine for which the respondent contends, should not prevail. It would enable parties, practically, to abrogate the principle that they cannot oust the Court of jurisdiction, in the manner hereinbefore mentioned. For, they could accomplish this purpose, by simply designating specifically, every question that could arise under the contract. The authorities sustaining this view, do not place any limitation upon the power of the contracting parties, to specify what issues shall be referred, and may thus leave the Court powerless, to do more than pass a formal order, affirming the award of the arbitrators.
In the note to the case of Chadwick v. Phoenix etc. Assn., 8 A. E. Ann. Cases 170, the annotator cites numerous authorities to sustain the proposition, that a denial of all liability by the insurer, leaves nothing for arbitration, and that the insured may maintain an action on his policy, before arbitration.
We come now to the main question in the case, to wit: whether the provision in the agreement for arbitration, was revocable.
An agreement to arbitrate, does not stand upon a higher plane, than an actual submission to arbitration, which, as will be seen from the authorities, may be revoked by either party at any time, before the award is made.
"Though there are cases which hold that a submission under a contract or agreement, founded upon a valuable consideration, or a submission which is part of an agreement containing other terms to be performed by the parties, is irrevocable, by one party without the consent of the other, *Page 276 the general rule is, that a submission may be revoked by either party thereto, before award, if the submission is not made a rule of Court, or is not otherwise regulated by statute. The remedy of the adverse party in case of a revocation, is by an action on the agreement to submit, or on the submission bond. But where an award is made and published, neither party can revoke the submission, without the consent of the other." 3 Cyc. 610-1. "A distinction has been drawn in some cases, the Courts holding that an arbitration clause in a contract is merely collateral to the agreement to pay, and is, therefore, no bar to an action upon the contract." 2 Encyc. of Law 582.
"At the common law, a submission might be revoked by any of the parties thereto, at any time before the award was made, nor was this right taken away by an express stipulation in the submission, that it should be irrevocable. And where one of several persons, who jointly made but one party, revokes the submission, even against the will of the others, it makes the submission void as to all." — Id. 594-5-6.
"Outside of the liability for breach of the agreement to submit, the effect of revoking the submission, is to restore the parties to their original rights against each other, as they existed before the submission was made." Id. 603-4.
"The authority of an arbitrator is at common law, in its nature revocable, and no act of the party submitting can render it irrevocable; but if the party is bound under a penalty to abide the arbitration, the bond is forfeited by his countermanding the authority. Vynier's Case, 3 Eng. Ruling Cases 357.
"It is an ancient and well established rule, that either party may revoke his submission, at any time before the award is made; and by this revocation, render the submission wholly ineffectual, and, of course, take from the arbitrators, all power of making a binding award. * * *
"As an agreement to submit is a valid contract, the promise of each party being the consideration for the other, a *Page 277 revocation of the agreement or of the submission, is a breach of the contract, and the other party has his damages. The measure of damages would generally include all the expenses the plaintiff has incurred about the submission, and all that he has lost by the revocation in any way. * * * It may be implied as well as express; and would be implied by any act, which made it impossible for the arbitrators to proceed." 2 Par. on Com. * pages 710-711.
These authorities show that his Honor, the presiding Judge, erred, in his ruling upon the question of revocation.
Thus far, we have discussed this question, without reference to the constitutional and statutory provisions in our State. Section 1, article VI of the Constitution is as follows: "The General Assembly shall pass laws, allowing differences to be decided by arbitrators, to be appointed by the parties, who may choose that mode of adjustment."
Section 2849 of the Code of Laws, provides, that "it shall be lawful for any and all persons, in cases of disagreement or differences of opinion, as to the proper settlement of any contention that may hereafter arise and either party to the contention may propose to leave their differences to arbitrators, each party to enter into bond, in double the amount involved, to faithfully abide the result of arbitration. The arbitrators shall be selected in the following manner. * * * The finding of said board of arbitration shall be final." * * *
In construing this statute, the Court used this language in the case of Bishop v. Manufacturing Co., 78 S.C. 312,58 S.E. 939:
"The agreement for arbitration is complete, when one party to a dispute proposes arbitration, and the other assents to it, and each party enters into bond, in double the amount involved, to faithfully abide the result. The selection of arbitrators, is no part of the agreement required by the statute. After the agreement has been made, the statute provides a method of selection, so that there may be no reason *Page 278 for difference between the parties, on the point. But this is nothing more than conferring on each party, the right to demand that the arbitrators be selected, in the manner indicated in the statute. This right, like all others, may be waived by agreement of the parties, to select the arbitrators in some other way. Hence it is illogical to say, an arbitration cannot be referred to the statute, merely because the parties agree on the arbitrators, instead of exercising the right to require them to be selected, in the manner indicated in the statute."
The words of the statute and the language of the Court indicate, that the remedy of either party, for a failure of the other, to abide by the terms of the contract, is by an action on the bond; thus showing that an agreement to arbitrate, is collateral in its nature, and that damages for a breach thereof, are recoverable in an independent action.
The question now under consideration, was determined in the case of Percival ads. Herbemont, 1 McM. 59. (Cited with approval in Smith v. Thomson, 1 Strob. 344.) For the purpose of an amicable settlement of the controversy in that case, a written agreement was entered into, by which it was agreed, that certain negroes should be delivered, to Dr. Percival — he agreeing to pay hire for such of them, as counsel of the parties should decide, the plaintiff was entitled to; and, on default of such decision, the plaintiff was to file a bill in equity, which was to include all the matters in controversy between them. In that case, the Court said: "The first thing in this case is, to ascertain the character and decide on the effect of the special plea in bar, filed by the defendant. The plea sets out a special agreement, by which it appears that the plaintiff had delivered up to the defendant, certain slaves which came into his possession at the death of his intestate, and had retained for a specific purpose, two others; and that defendant was to pay such a sum, for the hire of those he took, as should be determined on, by the counsel of the parties, or by the court of equity; and the plea alleged, *Page 279 that no sum had been agreed on by the counsel, nor had the plaintiff filed his bill in the court of equity. But it does not aver, that the defendant had applied to counsel, to have the matter adjusted himself. * * * It seems to have been the object of the parties, to submit the matters in controversy to arbitration; and this is the true character of their agreement. An agreement to arbitrate, or a bond to submit to arbitration, may be the subject of a suit, where the damages stipulated, or the penalty will authorize a recovery. But such an agreement, or bond, would not deprive either party of his remedy in the Courts, or oust them of their jurisdiction, in regard to the matter in dispute."
This language was used with reference to a special issue just such as is now under consideration. Mr. Justice Woods, practically concedes that the question now under consideration, was decided in that case; for he says: "It is true that the case of Percival ads. Herbemont, 1 McM. 59, decided in 1840, does lay down in very broad language, the general rule that a suit may be brought, in disregard of any sort of agreement to arbitrate," etc. He, however, contends, that the case just mentioned is no longer authority in this State, against the rule for which he contends as to the validity of arbitration agreements, for the reason that the cases of Maxwell v. Thompson, 15 S.C. 612, and Brooks v.Laurens Milling Co., 78 S.C. 200, 58 S.E. 806; 84 S.C. 299,66 S.E. 294, held that agreements to arbitrate are not against public policy. Conceding that agreements to arbitrate, are not against public policy, it by no means follows, that such an agreement can have the effect of ousting theCourt of its jurisdiction. It seems to us, that the failure of Mr. Justice Woods to observe this distinction, has caused him to reach an erroneous conclusion.
Let us, however, see if the cases upon which he relies, sustain the proposition, that the case of Percival ads. Herbemont, 1 McM. 59, has been overruled. The case of Maxwell v. Thompson, 15 S.C. 612, was regarded as so unimportant, *Page 280 that it is published among the unreported cases, and all that it says in regard to this question, is as follows: "A building contract provided, that in case of any disagreement, the matter of difference should be referred to three disinterested persons as arbitrators; such agreement is not against public policy, but may be waived by the parties." No mention is made of the case of Percival ads. Herbemont, 1 McM. 59, nor is there any reference as to the power of parties to oust the Court of jurisdiction, by agreements to arbitrate special issues.
The case of Brooke v. Laurens Milling Co., 78 S.C. 200,58 S.E. 806; 84 S.C. 299, 66 S.E. 294, has no application whatever to the question under consideration, as there was an award in that case; and, the right of the parties to oust the Court of jurisdiction was not involved. There is no doubt, that the agreement in the present case, was to arbitrate, which, of course, meant that the parties should have all the rights incident to arbitration, one of which is the right of revocation.
It will thus be seen, that the Court cannot be ousted of its jurisdiction, until the right of revocation is destroyed, for which we fail to find any authority in this State. Mr. Justice Woods quotes the following language from the case ofParsons v. Ambos, (Ga.) 48 S.E.R. 696: "This fixing of value is a mere incident, and not of the substance of the contract. It rather serves the office of evidence." In the first place, this decision is against the rule stated in Percival ads.Herbemont, which shows that it is not a rule of evidence, but an agreement to arbitrate, with all the incidents of arbitration. And, in the second place, we do not understand how, as a mere rule of evidence, such an agreement could have the effect of ousting the Court of jurisdiction.
But whatever might have been done under the Constitution of 1868 towards ousting the Court of its jurisdiction, no agreement of any kind whatsoever, can have such effect *Page 281 since the adoption of the Constitution of 1895, section 15, article V, of which provides, that "the Courts of Common Pleas shall have jurisdiction in all civil cases." This provision was inserted, for the prevention of just such questions, as have arisen in this case. This section was construed in the case of Epperson v. Jackson, 83 S.C. 157,65 S.E. 217, in which the Court said: "Section 15, article V of the Constitution provides that the Court of Common Pleas shall have jurisdiction in all cases, thus showing that its jurisdiction, with that of the probate court in matters such as are now under consideration, is concurrent. The words: `They shall have jurisdiction in all civil cases' in section 15, article V of the Constitution of 1895, are not to be found in section 15 article IV of the Constitution of 1868, which was construed in Ex parte White, 33 S.C. 442, 12 S.E. 5." In the last mentioned case, it was held that the jurisdiction of the probate court, as to the matter then before it, was exclusive.
The Court of Common Pleas is the tribunal constituted by law, for the trial of civil cases. A board of arbitrators is, also, a tribunal for the trial of such issues, as may be submitted to it. Such board may be created by law, or by agreement of the parties. The final determination of the rights of the parties by the Court, is denominated a judgment, while that of a board of arbitrators, is defined as an award. But whether there is a judgment rendered by the Court or an award made by a board of arbitrators, it is conclusive of the question thus decided. If there is an award by arbitrators, it is so far res adjudicata in its nature, as to the question submitted, that it can not again be made an issue in the Court of Common Pleas, unless there was fraud or undue influence. But until there is an award, section 15, article V of the Constitution shows, that the parties cannot by agreement oust the Court of its jurisdiction. *Page 282
I can not conceive, how the framers of the Constitution, could have expressed in stronger language, their intention that the Court of Common Pleas, should not be deprived of its jurisdiction, by agreement or otherwise.
For these reasons I dissent.