138 N.W.2d 209
Supreme Court of Wisconsin.November 4, 1965. —
November 30, 1965.
Page 185
APPEAL from part of an order of the circuit court for Milwaukee county: WILLIAM I. O’NEILL, Circuit Judge Reversed.
Appellant is an asphalt paving company. Respondents are the developers of a shopping center in Milwaukee.
In May, 1962, on the basis of respondents’ instructions to bidders, specifications and site plan, appellant submitted a proposal in the amount of $30,431.95, for “finish grading, stone base and bituminous paving” encompassing 22,000 plus square yards at the shopping center.
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A written contract for the price was entered into between the parties. In September of 1962 the parties entered into an agreement for additional work requiring appellant to pave a “truck road” at a price of $2,454 and an area in front of Woolworth’s at a price of $3,411, or a total price of $5,865. In October of 1962 a third agreement was entered into whereby appellant was to pave an area between Woolworth’s and Arlan’s at a price of $872.48. In addition, appellant claimed that it provided, at a cost of $3,860.50, all the materials and labor necessary to make some areas fit for the application of asphalt, and that it surfaced an area known as the Pure Oil area, which was not within the scope of the original contract, at a cost of $2,616.11. Appellant claimed it did this work pursuant to verbal agreements with respondents. Appellant also claimed $1,787.65 for work in connection with, but allegedly outside the scope of, the original contract.
Appellant made demands for the above amounts but respondents refused to pay on the ground that the work was defective. On February 8, 1963, appellant filed a lien on the shopping center and then commenced an action for foreclosure in circuit court for Milwaukee county.
Respondents denied liability, counterclaimed for $70,000 damages allegedly caused by faulty workmanship, and asked for a plea of abatement on the grounds that the contract required arbitration as a condition precedent to litigation. The written contract incorporated specifications prepared by the architect, which, in turn, incorporated A. I. A. General Conditions, which contain a provision for arbitration of all disputes before resort to the courts. Article 40 of those conditions provides:
“All disputes, claims or questions subject to arbitration in accordance with the provisions, then obtaining of the STANDARD FORM OF ARBITRATION PROCEDURE of the American Institute of Architects. . . .
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It is mutually agreed that the decision of the Arbitrators shall be a condition precedent to any rights of legal action that either party may have against the other.”
Pursuant to stipulation the court, on June 11, 1964, ordered:
“That all proceedings in the above entitled action are hereby abated and that the matter be submitted for Arbitration under the American Institute of Architects arbitration provision; that this matter for Arbitration shall not be heard before September 1, 1964, but in any event, shall be heard before September 15, 1964.”
Three arbitrators — a lawyer, a civil and structural engineer, and a building industry consultant — were selected. They asked that the parties outline their positions in letter form. In its letter dated December 14, 1964, appellant made a total claim of $43,646.04: (1) $30,431.95 on the original contract, (2) $5,865 on the September contract, (3) $872.48 on the October contract, (4) $2,616.11 for work done in the Pure Oil area, and (5) $3,860.50 for labor and supplies in grading certain areas. Appellant did not renew the claim of $1,787.65 work done in connection with the original contract.
Respondents claimed that the work done by appellant was defective and demanded that the arbitrators determine the extent to which appellant’s failure in this respect damaged them.
The arbitrators’ report, dated January 11, 1965, indicated that the hearings were thorough. The report states:
“Each attorney was permitted the opportunity to present his case in the usual manner, and each was permitted the opportunity of both direct and cross examination. . . . Each of the disputants called various witnesses and each offered considerable technical testimony and a large variety of exhibits.”
No record of the hearings was kept.
The arbitrators’ report listed each claim made by each party and their disposition of the claim. Each of appellant’s
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claims was listed but with respect to the “Pure Oil area” claim the report stated:
“For extra compensation for work performed in the Pure Oil area. The southeasterly area, and an area between Phase I and Phase II; and a general claim for $10,000.00, more or less, by virtue of having approximately 50% more square yards of paving than the drawings indicated.
“With some reservations this claim was allowed. The method of computing the award makes allowance for this.
“The evidence was not clear, and was conflicting. It is a fact, however, that STRUDELL installed and the OWNERS received over 31,000 square yards of pavement.
“It was also clear, and never disputed, that the unit cost of $1.33 per square yard was a fair charge.”
Each of the other claims of appellant was allowed except the $3,860 claim for materials and labor in connection with readying the area for surfacing.
The arbitrators found that the materials and work were deficient and said that the method of determining the net award took this into consideration.
The arbitrators set forth their method of computing the net award. They allowed the $5,865 and $872.48 claims. The remainder of the gross award was computed as follows:
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One third was deducted from the gross award “for deficiencies in the material and performance” leaving an award of $32,231.91. Five percent interest was allowed so the net award was $35,640.64.
On respondents’ motion the circuit court modified the arbitrators’ award. The circuit judge in his opinion pointed out that while the arbitrators found that extra work was done by appellant, they could not award more than $2,616.11, the amount claimed by appellant, for the work done.
The trial judge said:
“It is therefore the considered opinion of this court that the award of the arbitrators must be modified by reason of the fact that they exceeded their powers, in that they re-evaluated the initial contract by including it in extras as set forth in the Pure Oil Car Wash area, then assessed a square foot value of $1.33 upon the total square yardage of 31,286 yards, exclusive of the Arlan and Woolworth area.
“The arbitrators were not vested with the authority to rewrite the contract, or to re-evaluate the contract of the parties. Hence, this court hereby modifies the award of the arbitrators and amends the same to set forth as the amount due and owing by the defendants to be $26,523.38, modifying the finding of the arbitrators of $32,231.91. The $26,523.38 shall bear interest at the rate of 5 per cent from December 1, 1962.”
The paving contractor appeals from that part of the court’s order modifying the arbitrators’ award.
Other facts will be stated in the opinion.
For the appellant there was a brief by Rice Ramsey
and Edward S. A. Ramsey, all of Milwaukee, and oral argument by Edward S. A. Ramsey.
For the respondents there was a brief by E. Ace Bernstein and Frederick P. Mett, both of Milwaukee, and oral argument by Mr. Mett.
WILKIE, J.
The single issue on this appeal is: Did the matter submitted for arbitration include the
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contractor’s claim for all additional work performed on the whole shopping center and not just the specific items set forth in its complaint?
Respondents contend that “the matter” submitted to the arbitrators by stipulation and court order consisted of the allegations contained in the complaint, answer and counterclaim in the civil action together with the allegations made by letters to the arbitrators, and that the arbitrators could not consider anything not specified in those documents. In the complaint appellant made a claim for “asphalt surfacing in the area commonly known as the Pure Oil property” to the extent of $2,616.11. This claim was repeated, but not expanded, in the letter to the arbitrators. Respondents contend, and the circuit court ordered, that the arbitrators could not consider extra work beyond that done in the Pure Oil area and, in any event, could not allow more than $2,616.11 for extra work done.
Appellant contends that the arbitrators were free to consider the whole matter of extra work done by appellant on the whole shopping center and were not limited to the precise claims asserted in the complaint or its later letter to the arbitrators.
The appellant is correct. The arbitrators did not make an award on a matter not submitted to them. The contract between the parties required arbitration before litigation on any dispute. When appellant commenced its lawsuit, respondents countered by asserting their own claim and by demanding arbitration as agreed to. The court ordered that “the matter be submitted for arbitration.” To hold that the arbitrators were confined to the four corners of the complaint and answer would result in remaking the contract that requires all disputes to be arbitrated before a party takes legal action. Moreover, such an interpretation would be an unduly restrictive and technical construction of the breadth of the controversy which the arbitrators were expected to consider. What appellant was after was to be paid for the required work
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done on the project bearing in mind that it had actually installed over 31,000 square yards of pavement in the disputed area whereas the original contract was based on original drawings calling for 22,000 plus square yards. What respondents were after was to settle their claim that the work and material were deficient.
This is a statutory arbitration under ch. 298, Stats.[1]
The Wisconsin Arbitration Act does provide for court review of arbitrators’ awards and specifically spells out circumstances under which these awards may be vacated (sec. 298.10) or modified (sec. 298.11).
Sec. 298.11 (1) (b), Stats., provides:
“MODIFICATION OF AWARD. (1) In either of the following cases the court in and for the county wherein the award was made must make an order modifying or correcting the award upon the application of any party to the arbitration:
“. . .
“(b) Where the arbitrators have awarded upon a matter not submitted to them unless it is a matter not affecting the merits of the decision upon the matters submitted; . . .”
In the very recent case of Reith v. Wynhoff[2] this court, on appeal, modified an arbitrators’ award pursuant to this statute where the parties had agreed to arbitrate the issues in a lawsuit concerning the alleged defective construction of a multifamily residence and where the arbitrators had included in the award a sum for “inconvenience” contrary to the detailed terms agreed on by the parties to govern the arbitrators in determining diminished value.
In the instant case there were no such detailed terms governing the arbitrators. The scope of the matter referred to them was broad enough to include the appellant’s claims, contained in the arbitrators’ report.
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Significance must be attached to the fact that this was arbitration of a matter pursuant to a contract agreement calling for arbitration of all disputes prior to litigation; it was not pursuant to an agreement to arbitrate the issues in a lawsuit where there had been no preceding contract to arbitrate.
In Putterman v. Schmidt[3] this court said:
“. . . it is not necessary that the subject be submitted by bill of particulars or with the same particularity required in pleadings. It is enough if a common intent as to what was submitted appears with reasonable certainty. 5 Corp. Jur. p. 36. If what was submitted appears by manifest implication it is as certain as if positively expressed. Rixford v. Nye, 20 Vt. 132. Ambiguity if any may be removed by parol.”
The common intent here was to arbitrate appellant’s claims for the extra work done and respondents’ claims of defective materials and performance. This “matter” was broader than the provisions of the pleadings or the contents of the letters to the arbitrator’s dated December 14, 17, 21, and 26, 1964. It follows that the award was on a matter submitted for arbitration and, therefore, the award should not have been modified.
The Wisconsin Arbitration Act also provides that an award can be vacated. Sec. 298.10 (1) (d), Stats., provides:
“(1) In either of the following cases the court in and for the county wherein the award was made must make an order vacating the award upon the application of any party to the arbitration:
“. . .
“(d) Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made.”
Thus, this was not a case for the exercise of the court’s authority to vacate the award. Although the trial judge used language in his order stating that the arbitrators
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“exceeded their powers” and “were not vested with the authority,” there was no contention in the trial court and none here that the arbitrators exceeded their powers or exercised authority not vested in them.
By the Court. — Order reversed, and cause remanded for reinstatement of arbitrators’ award.