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MCDEVITT v. MCDEVITT (05/22/50)

May 22, 1950

MCDEVITT, EXR., APPELLANT,
v.
MCDEVITT



Appeal, No. 61, Jan. T., 1950, from order of Court of Common Pleas No. 6 of Philadelphia County, June T., 1948, No. 3142, in case of Thomas R.C. McDevitt, Executor of Last Will and Testament of Charles B. McDevitt, Deceased Partner, v. Richard J. McDevitt, Surviving Partner. Order affirmed.

COUNSEL

Frank F. Truscott, with him William N. Trinkle, for appellant.

Otto Kraus, Jr., with him J. Franklin Nusbaum, for appellee.

Before Drew, C.j., Stern, Stearne and Bell, JJ.

Author: Stern

[ 365 Pa. Page 19]

OPINION BY MR. JUSTICE HORACE STERN

The controversy in this case concerns the valuation of a deceased partner's interest in the partnership.

Under articles of agreement between Charles B. McDevitt and Richard J. McDevitt, two brothers associated in the general storage and warehouse business, it was provided that, in the event of the death of either, if the survivor should be desirous of continuing the business he should give notice to that effect to the personal representative of the deceased partner's estate and if they were unable to agree upon a valuation of the decedent's interest the matter should be referred to a board of arbitrators whose decision should be binding as to value; the survivor was to have the option to accept the figure so fixed by the board within ten days thereafter; if he did not accept it the business was to be liquidated and the net proceeds divided equally between the two partnership interests. Charles B. McDevitt having died, the surviving partner, Richard J. McDevitt, gave due notice of his desire to continue the business but he and the executor of the decedent's estate were unable to agree upon a valuation of the latter's share. Accordingly they submitted the matter to a board of arbitrators duly appointed in accordance with the provision to that effect in the agreement. After a number of hearings the

[ 365 Pa. Page 20]

    arbitrators made a finding that the value of decedent's interest was $150,311.74. They stated in their report that a cash offer had been made on behalf of one Raymond C. McDevitt to Richard J. McDevitt, the surviving partner, in the sum of $215,000 for the latter's share in the partnership, that this offer was refused by him, that he had the option, under the partnership agreement, of continuing the business and was under no obligation to sell his interest to Raymond C. McDevitt, and that the board believed that they were not bound as to value by the offer made by Raymond C. McDevitt and therefore they did not take it into consideration. The executor of the decedent's estate thereupon filed with the court below a petition for a rule to show cause why the award made by the arbitrators should not be vacated under section 10(c) of the Act of April 25, 1927, P.L. 381, on the ground that they had been guilty of misconduct in refusing to hear evidence pertinent and material to the controversy. The court held that while the arbitrators were not bound by the $215,000 cash offer in reaching their valuation they were bound to consider it with all the other evidence in the case, the court stating, however, that "We express no opinion on the effect the offer should have. The arbitrators may alter their award after considering it or they may not." Accordingly, the court vacated the award and directed that the arbitrators should hold a rehearing. This having been done, the board, one of the three arbitrators dissenting, reported that they had considered all the evidence in the record, including the offer made by Raymond C. McDevitt, but they nevertheless found the value of the decedent's interest in the partnership to be the same as their previous award, namely $150,311.74. Thereupon the executor of the decedent's estate again filed a petition for a rule to show cause why the award of the arbitrators should not be vacated. The court,

[ 365 Pa. Page 21]

    holding that there was now no error of law appearing on the face of the award, denied the petition, and from that order the present appeal is taken.

At common law, unless the agreement between the parties provides otherwise, arbitrators are the final judges of both law and fact, and an award will not be reviewed or set aside for mistake in either; Canuso v. Philadelphia, 326 Pa. 302, 308, 192 A. 133, 136; Goldstein v. International Ladies' Garment Workers' Union, 328 Pa. 385, 389, 196 A. 43, 46. But in the present instance it seems to be agreed by both parties that the arbitration under the partnership agreement was to be governed by the Act of April 25, 1927, P.L. 381; that Act provides (section 11(d)) that the court shall modify or correct the award upon the application of any party to the arbitration where the award is against the law and is such that had it been a verdict of the jury the court would have entered a different or other judgment notwithstanding the verdict; therefore mistakes of law, but only mistakes of law, may be rectified on appeal: Navarro Corporation v. Pittsburgh School District, 344 Pa. 429, 432, 25 A.2d 808, 810. Whether the court below was correct in holding that Raymond C. McDevitt's offer to purchase the surviving partner's interest for $215,000 should have been taken into consideration by the arbitrators need not presently be passed upon since they obeyed that ruling and it is not now the subject of attack. But appellant contends that the arbitrators could not have given weight to the offer because they did not change their ...


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