Evans v. Clapp. EVANS V. CLAPP. (123 Mass. 165) Arbitration - Partnership accounting - Effect of award. An agreement for dissolution of a partnership between A, B, and C, provided that A should continue the business, paying B and C for their respective interests, for the arbitration of disputes, and for an account of stock. This account was taken, and certain goods, supposed to belong to a third party, were excluded. Arbitrators were selected and decided all matters of difference, but the question about those goods was not submitted to them. A settled with B and C on the basis of that account. In a subsequent dispute between the partners and the third party, the referee, to whom it was submitted, decided that a large portion of those goods belonged to the late firm. Held, that the account was not conclusive; that B and C might show that those goods were the property of the firm; that the award of the arbitrators was no bar; that A could not prove his readiness and willingness to refer this claim to the arbitrators; and that the award and the personal testimony of the referee, that the ownership of those goods was in dispute before and decided by him, was admissible. ILL in equity filed by Robert D. Evans and Levi Ladd against Charles M. Clapp, for the settlement of partnership affairs. Case reserved for the full court. ENDICOTT, J. The facts and questions presented upon this record are numerous and complicated, and may be more readily understood by reducing them to order and indicating those we consider material and important to the decision. The parties to this bill were partners dealing in rubber goods, having in their store a stock of goods of their own, and also goods consigned to them for sale by the National Rubber Company. The partnership was dissolved by articles of dissolution on October 1, 1872. The defendant was to continue the business with its good will, and the articles provided, among other things, that he should take the stock of goods on hand belonging to the firm and allow Evans v. Clapp. and pay the plaintiffs therefor in the settlement according to their respective interests. An inventory of stock on hand on October 1, 1872, was taken, and it was supposed that 14,136 pairs of boots and shoes then in the store were the property of the rubber company, and they were not included in the inventory. The articles also provided that matters in dispute between the partners should be determined by certain arbitrators named therein. There - were several matters in dispute upon which the arbitrators passed, but the master has found that the questions arising in this case were not submitted to or passed upon by them. The defendant, after October 1, 1872, carried on the business alone, and in the great fire of November 9, 1872, the bulk of his goods, including such of the 14,136 pairs of boots and shoes as then remained unsold, were destroyed. A controversy then arose between the plaintiffs and the defendant on the one side, as members of the dissolved firm, and the rubber company on the other, in regard to the settlement of their accounts; in which an important question in dispute was, who owned the 14,136 pairs of boots and shoes on October 1, 1872; the rubber company insisting that they belonged to the firm, and the members of the firm, that they were the property of the company. Being unable to agree, they entered into a submission in writing of all demands between them to a referee. At the hearing before him the firm presented a detailed statement of their account with a balance of about $41,000 due them. The account consisted of charges for advances made on goods consigned to them by the company, with credits for goods sold or assumed and taken by the firm. The chief matter in dispute was the ownership of the 14,136 pairs of boots and shoes, which the firm did not credit to the company in their account, as the company contended should be done. The referee admitted the claim of the rubber company, to the extent of 9,977 pairs, finding that number in fact to belong to the firm, and as a necessary result credited the company with that number in the account. He also found that certain goods charged to the rubber company as "reconsigned" and "recharged " goods should also be credited to the company. His award was in general terms in favor of the firm in the sum of $19,904 without further detail, and was settled by the parties on that basis. The plaintiffs thereupon bring this bill, which, among other things, in substance alleges that the defendant refuses to account Evans v. Clapp. for a large quantity of goods in the store on October 1, 1872, of which he took possession under the articles of dissolution, and which were considered by both parties at that time to belong to the rubber company, but which in fact belonged to the firm, and for which the defendant was bound to account and to pay the plaintiffs for their respective interests therein. The answer admits that the defendant took all the goods belonging to the firm on October 1, 1872, but denies that there were any goods taken by him, then considered to be the property of the rubber company, which in fact belonged to the firm. It then alleges that, at the time of the dissolution, an account of all the goods belonging to the firm was taken by the plaintiffs and assented to by the defendant, and that he has paid them according to the account; and the answer also alleges that all the matters in dispute have been submitted to arbitrators under the articles of dissolution, and their report is conclusive. It may be convenient in this connection to dispose of some of the questions raised and argued by the defendant. It is contended that it was not competent for the master to go behind the determination of the parties when they made the inventory. But the master has found that it was then supposed that the 14,136 pairs of boots and shoes belonged to the rubber company, and for that reason they were not included. The plaintiffs are not debarred, therefore, from showing that they were the property of the firm. It was a case of mutual mistake, and there is nothing in the articles of dissolution which makes an inventory binding or conclusive. The defendant also contends that the plaintiffs cannot maintain this suit, by reason of the provision for a reference in the articles of dissolution. It is sufficient to say, in reply to this, that no such question is open on the answer. The allegation of the answer is in substance that all matters in dispute were referred to arbitrators. This is an entirely different question, and the master has found that the questions here raised were not submitted to the arbitrators or passed upon by them. Their award, therefore, is not a bar to this demand. Edwards v. Stevens, 1 Allen, 315; 1 Dan. Ch. Pract. (4th Am. ed.) 670. See Wood v. Humphrey, 114 Mass. 185. Nor was it competent for the defendant to prove that he was ready and willing to refer this claim to the arbitrators named in the articles. The issue not being raised in the answer, that the agree Evans v. Clapp. ment to refer precluded the plaintiffs from maintaining this bill, whether the defendant was ready and willing to refer was immaterial. There were other matters set forth in the bill and answer, which were settled by the parties pending the hearing before the master; and the only question left for the master to decide was the claim against the defendant arising out of the adjustment of the affairs of the firm with the rubber company. The plaintiffs offered in evidence before the master, on the question who owned the 14,136 pairs of boots and shoes, and as to the goods described as "recharged" and "reconsigned" to the company, the award of the referee, and also his testimony to prove that the ownership of these boots and shoes was in dispute before him, and that he admitted the claim of the rubber company to the extent that 9,977 pairs belonged to the firm on October 1, 1872. Independent evidence was also offered by the plaintiffs on these questions. The defendant objected to the evidence of the submission to and award of the referee in the controversy with the rubber company, and to his testimony respecting the 14,136 pairs of boots and shoes on hand on October 1, 1872. The master makes two findings upon this part of the case: one based upon the award and the testimony of the referee; and the second upon the other evidence before him. Assuming the award and the evidence of the referee to be competent and conclusive, he finds that 9,977 pairs, and the reconsigned and recharged goods, belonged to the firm; and, if not competent, then upon other evidence he finds that a portion of the 14,136 pairs belonged to the firm, but that "it is not possible to ascertain at this time the exact quantity," and he is unable to do so; but as the best approximation to accuracy under the circumstances he finds that this quantity, would amount to 3,600 pairs, and that the "recharged and reconsigned goods" belonged to the firm, and he also finds the value to be $1.58 per pair. It is to be observed that, laying aside the award, the master has found on other evidence as to the recharged goods and as to the value per pair of the goods on hand on October 1, 1872, belonging to the firm. The only question, therefore, is whether the award and the testimony of the referee, that the ownership of the goods was in dispute before him, and that he admitted the claim of the rubber company to the extent that 9,977 pairs belonged to the firm, was competent, and the testimony of the referee as to other matters becomes immaterial. Evans v. Clapp. The first question that arises is, would the award and the testimony of the referee have been competent in a subsequent suit between these parties and the rubber company, in which the title to these goods was in dispute. The award of a referee, after a full hearing, and acquiesced in by the parties, is binding and conclusive upon all matters submitted to him. It often becomes necessary, in determining what questions are concluded by the award, or whether the award is in itself binding upon the parties, to show by parol evidence what took place before the referee, what was in controversy before him, and what matters entered into his decision. The referee is a competent witness himself to establish these facts. Martin v. Thornton, 4 Esp. 180; Strong v. Strong, 9 Cush. 560, 576, and cases. cited; Blakely v. Graham, 111 Mass. 8; Scott v. Perley, 98 id. 511; Wood v. Willis, 110 id. 454; In re Dare Valley Railway, L. R., 6 Eq. 429, 435. But parol evidence is not admissible to vary or control a written award, and there are numerous decisions showing in what cases such evidence is incompetent, and in which a referee is precluded from testifying. Wiswall v. Hall, Quincy, 27; Withington v. Warren, 10 Metc. 431, 433; Clark v. Burt, 4 Cush. 396, 399; Leavitt v. Comer, 5 id. 129; Ward v. Gould, 5 Pick. 291. See 2 Greenl. Ev., § 78. In a recent case in England, heard before the Court of Exchequer, the Exchequer Chamber and the House of Lords, this question is very fully and elaborately considered. Buccleuch v. Metropolitan Board of Works, L. R., 3 Ex. 306; L. R., 5 id. 221; L. R., 5 H. L. 418, 457, 462. The case arose upon a claim made by the plaintiff for damages to his property by reason of an embankment constructed by public authority along the River Thames, and was referred to an arbitrator, who was called as a witness by the defendants for the purpose of showing that he exceeded his authority. All the judges gave opinions in the course of the proceedings. The Lord Chancellor, in giving the final judgment in the House of Lords, remarked: "The umpire being a competent witness, the only question is, to what extent the defendants were entitled to examine him as to the particulars of his award. They had an undoubted right to know from him whether in his estimate of the compensation he took into consideration any matters not included in the reference, and therefore not within his jurisdiction. To prevent the defendants from questioning him so far would have |