This cause being referred, a report was made in favor of the
Plaintiff for a considerable amount, to which the following
Page 1 U.S.
313, 314
exceptions were filed, and argued on the 12th of July, by J. B.
M'Kean, Lewis, and Ingersoll for the Defendant; and Sergeant and
Coultburst for the Plaintiff:
1st. That the Referrees heard the Plaintiff's witness ex
parte.
2nd. That they heard the Plaintiff ex parte, without giving
notice to the Defendant.
3rd, That they have allowed interest upon an unsettled
account.
4th, That they refused to allow a set off.
5th, That the Defendant has discovered new and material
testimony since the report.
6th, That the Referrees allowed a charge for Premium and
Commissions in making an Insurance for the Defendant, without
requiring the Plaintiff to produce the policy, or having any other
proof that the Insurance was effected, than a letter from the
Plaintiff himself to his Partner in Philadelphia, in which he says
he has done it.
As the CHIEF JUSTICE, in delivering the opinion of the Court,
adverted to those exceptions which were groundless, or immaterial,
and stated those particularly on which their decision was formed, I
shall avoid recapitulating the arguments of counsel, and only
subjoin the authorities on both sides.
M'Kean, Chief Justice. [314-Continued.]
There are four species of Awards: first, those made by mutual
consent, in pursuance of arbitration Bonds entered into out of
Court; secondly, those which are made in a cause depending in a
Court of Law or Equity, upon the consent of the parties to refer
the matter in variance (which are awards at common law) thirdly,
those which are made under a rule of Court, by virtue of the
statute of 9 and 10. W. 3. c. 15. which was calculated to remedy
the delay and circuity of action attendant upon Awards made merely
in pursuance of arbitration Bonds, without the intervention of a
controuling power, to compel the acquiescence of the parties. These
are the only Awards in use at this day in England; but the
Legislature of Pennsylvania, in the year 1705, introduced another
species here, which are fourthly, those awards, or reports, that
are made in pursuance of the act of Assembly setting forth, that
'where the Plaintiff and Defendant consent to a rule of Court for
refering the adjustment of their accounts to certain persons
mutually chosen by them in open Court, the award, or report, of
such Referees, being made according to the submission of the
parties, and approved by the Court, and entered upon the record, or
roll, shall have the same effect, and be as available in law as a
verdict by twelve men.' 1 State Laws 48. 4 Ann. c. 36.
This act differs essentially from the statute of W. 3. in many
respects, but particularly, that to render a report, or award,
valid and effectual, the former requires, that it be approved by
the Court; but no such provision is made by the latter, and,
therefore, awards under rules of Court, are conclusive in England,
unless some corruption,
Page 1 U.S.
313, 315
or other misbehaviour, in the Arbitrators is proved. The Courts
of Equity, indeed, have taken a wider ground, and whereever a plain
error appears either in matter of fact or law, it seems, they will
make it an object of enquiry. 2 Vern.705. 1 Vern.157. 3 Atk.494.
From some expressions in the authority, we might presume, that the
error must be apparent on the award; but as the Chancellor, at the
same time, speaks generally, that it must be set forth in the bill
for relief, there is, at least, great room to doubt upon the
subject. In Pennsylvania, however, since the Revolution, as the
approbation of the Court is made a necessary ingredient in the
confirmation of reports, we have thought it our duty, from time to
time, to enquire into the allegations against them, before we gave
them our sanction. But, in doing this, we have always confined
ourselves to two points; 1st, Whether there is an evident mistake
in matter of fact; or secondly, whether the Referees have clearly
erred in matter of law. If either of these is satisfactorily
proved, the argument is, surely, as strong for setting a report
aside, as where injustice has been done by the corruption, or other
misconduct of the Referees. Is it not reasonable, indeed, that the
same cause which would induce us to set aside a verdict, and grant
a new trial, should be sufficient for vacating an award? In the one
case, the decision is made by twelve men upon oath, with all the
information which the Judges, and learned Counsel can communicate:
in the other, it is the act of three persons, who are not sworn to
the faithful discharge of their duty, and who are unassisted,
either in ascertaining the law, or in developing the fact, upon
which the question submitted to them may depend. This abundantly
shows that the sacredness of awards ought not to be extended beyond
that of verdicts; and must justify the Court in putting them upon
the same footing, when errors are suggested either in clear points
of law or fact. If, therefore, we would have granted a new trial,
had the present exceptions been made to a verdict, we ought, for
the same reasons, to set aside the report in question. Let us,
then, consider the case upon its merits. The evidence has failed in
establishing the first and second exceptions, which relate to the
misconduct of the Referees; and, with respect to the fourth and
fifth, though the Court incline to think that the arguments are in
favor of the Defendant, yet we do not find it necessary to give any
opinion upon these, as we have no doubt, that, for the third and
sixth reasons, the report ought to be set aside. Thus, under the
third exception, it has been proved by the statement exhibited by
the Referees, that interest was allowed to the Plaintiff upon an
unliquidated account; which is contrary to the general rule of law,
as well as to the repeated decisions of this Court. There are only
three cases in which interest can be allowed upon an open account;
1st, where it is payable by the express agreement of the parties;
2nd, where it is payable by a general usage, as in the trade
between England and America, to which (with
Page 1 U.S.
313, 316
an exception during the continuance of the late war) we have
uniformly acceded; and 3rd, where there has been a vexatious and
unreasonable delay in making payment, which will induce the Court
to direct, and the Jury to grant, an adequate compensation, under
the name of damages, for which the rate of interest is generally
made the rule of computation. The doctrine upon this subject was
fully discussed and determined in Henry Exor. vs. Risk et al. ant
265. We think it establishes a just and useful principle, which
tends equally to promote credit, and to prevent feuds and
litigations. In transgressing this principle, the Referees have
mistaken a clear point of law, which would alone be sufficient for
setting aside their report.
But, besides this, we find by the evidence under the sixth
exception, that they have also allowed the charge of premium and
commission for making an Insurance, without requiring the Policy to
be produced, or any proof of its being lost; which is the only
evidence that, in such cases, can be admitted in any Court, either
of civil or common law jurisdiction. It is, indeed, a fundamental
maxim in the laws of evidence (wisely framed for the prevention of
frauds) that the best proof, of which the fact reasonably admits,
ought to be given. This has not been complied with on the present
occasion; and the Referees in over looking it, have violated
another plain principle of law.
Upon the whole, as our decision against the Plaintiff can
produce no material injury, but if against the Defendant, would
forever preclude him from a chance of justice, The Court
unanimously direct.
That the Report be set aside.
For the Plaintiff were cited: 5 Bac. 250. 1 Bac. 134. 2 Burr,
701. Salk. 71.73. 3 Burr. 1259. 2 Vern.705. 1 Vern. 157. Bull.
L.N.P.170.180. 8 Vin. 61. 1 Atk. 67. 2 Vern. 706. 3P. Wms. 25. 408.
3 Atk. 509.
For the Defendant were cited: 2 Vern. 515. 1 Atk. 64. 2 Vern.
705. 3 Atk. 494. 3 Burr. 1259. 5 Burr. 2729 1 Ld. Ray. 271. 12 Vin.
25. pl. 35. Cowp. 445. Doug. 627. 1 Show. 173. 1 Salk. 392. Gilb.
L.E.4. 5.16.17.
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