FRANKLIN v. NAT GOLDSTONE AGENCY

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District Court of Appeal, Second District, Division 3, California.

FRANKLIN et al. v. NAT. C. GOLDSTONE AGENCY.

Civ. 15881.

Decided: December 23, 1947

Kaplan, Livingston & Lewis and Eugene S. Goodwin, all of Los Angeles, for appellants. A. L. Weil, of Los Angeles, for respondents.

The parties submitted a controversy which existed between them to arbitration. The submission was unqualified and without restriction. It did not contain any provision that the arbitrator should make his award according to law or according to the legal right of the parties or any like provision. It said, in part, ‘we will abide by and perform any Award rendered pursuant to this Agreement, and that a judgment of the Court having jurisdiction may be entered upon the Award.’

The conflict arose from an oral agreement by which respondents agreed to decorate the office of appellant. The work included painting and carpeting. The dispute was with respect to respondents' charges for the painting and carpeting. The arbitrator made an award in favor of respondents. Within three months after the arbitrator made his award, respondents applied to the superior court for an order confirming the award. The application for confirmation did not allege that respondents, either as a firm or individually, were licensed by the State of California to act as contractors at the time the work was done. On the day of the hearing on the application, appellant filed an affidavit of one of its attorneys in opposition to confirmation of the award. The affidavit stated, upon information and belief, that neither of respondents ‘is or was a licensed contractor.’ It contained a positive statement ‘that no allegation or proof of contractor's license was made by petitioners or either of them during the said arbitration.’ The court made an order confirming the award and ordered that a judgment be docketed in favor of respondents for the amount of the award. The appeal is from this order.

We have before us: (1) The petition for confirmation of the award, to which is attached the submission, notice to arbitrator of appointment, acceptance by arbitrator of the appointment, award of arbitrator, and arbitrator's statement and conclusions; (2) order to show cause why award should not be confirmed; (3) affidavit of Monte E. Livingston in opposition to petition for confirmation of award and points and authorities in support thereof; (4) order confirming arbitrator's award and ordering that judgment be docketed.

Appellant contends that the petition to confirm the award is fatally defective because it does not allege or appear therefrom or from any of the documents attached that respondents were duly licensed contractors at all times during performance of the agreement and that, therefore, the order is without legal support. It is conceded that the order is proper as to the charge for carpeting. The contention of appellant applies solely to the order insofar as it confirms the award for painting appellant's offices amounting to $1,648.59.

The affidavit of the attorney for appellant, insofar as it states upon information and belief that neither of petitioners is or was a licensed contractor, may not be considered for three reasons: First, an affidavit upon information and belief is hearsay and no proof of the facts stated therein. Kellett v. Kellett, 2 Cal.2d 45, 48, 39 P.2d 203; Swain, The Use of Affidavits As Evidence, XXII State Bar J. 144. In the absence of a reporter's transcript we must presume that proper objection to its use was made before the judge who confirmed the award and that the objection was sustained. Second, an affidavit on information and belief as to a public record is hearsay and no proof of the facts stated therein. Vickery v. Valdez, 113 Cal.App. 135, 139, 298 P. 151. Whether a contractor's license had or had not been issued to respondents by the Contractors' State License Board was a matter of public record. Bus. & Prof. Code, secs. 7000, 7072, 7080. Third, as will be developed, the award of the arbitrator may not be attacked upon this ground. Appellant, in effect, conceded at the oral argument that the affidavit was and is of no value and relied solely upon his point that it was incumbent upon the respondents to allege a license in their application for confirmation.

It is unlawful for any person to act in the capacity of a contractor within this state without having a license therefor. Bus. & Prof.Code, sec. 7028. Business and Professions Code, section 7031, provides: ‘No person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action in any court of this State for the collection of compensation for the performance of any act or contract for which a license is required by this chapter without alleging and proving that he was a duly licensed contractor at all times during the performance of such act or contract.’

An agreement in writing to submit an existing controversy to arbitration pursuant to the provisions of section 1281 of the Code of Civil Procedure, is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract. Code Civ.Proc., sec. 1280. Two or more persons may submit in writing to arbitration any controversy existing between them at the time of the agreement to submit which arises out of a contract or the refusal to perform the whole or any part thereof. Code Civ.Proc., sec. 1281. At any time within three months after the award is made, unless extended by the parties in writing, any party to the arbitration may apply to the superior court for an order confirming the award, and ‘thereupon said court must grant such an order unless the award is vacated, modified or corrected, as prescribed in the next two sections.’ (Emphasis added) Code Civ.Proc. § 1287. Code of Civil Procedure, section 1288, provides that a court must vacate an award upon the application of any party to the arbitration in either of the following cases: ‘(a) Where the award was procured by corruption, fraud, or undue means. (b) Where there was corruption in the arbitrators, or either of them. (c) Where the arbitrators were guilty of misconduct, in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence, pertinent and material to the controversy; or of any other misbehaviors, by which the rights of any party have been prejudiced. (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.’ Section 1289, providing for modification or correction of the award, is not pertinent here.

There must be attached to the application to confirm the award copies of: The agreement, the appointment of the arbitrator, and the award. Code Civ. Proc., sec. 1291. Upon granting the order confirming the award, judgment may be entered in conformity therewith. The judgment so entered has the same force and effect ‘as if it had been rendered in an action in the court in which it is entered.’ Code Civ.Proc. § 1292.

The only grounds for vacating or refusing to confirm an award are those set forth in Code of Civil Procedure, section 1288. In re Connor, 128 Cal. 279, 282, 60 P. 862; Kerr v. Nelson, 7 Cal.2d 85, 89, 90, 59 P.2d 821. An arbitrator, who is frequently not learned in the law, is not required to award on principles of dry law but may decide on principles of equity and good conscience and make an award ex aequo et bono. In re Connor, supra; Pacific Vegetable Oil Corp. v. C. S. T., Ltd., 29 Cal.2d 228, 241, 174 P.2d 441. The merits of the dispute between the parties to an arbitration proceeding are not subject to judicial review. Pacific Vegetable Oil Corp. v. C. S. T., Ltd., supra, pages 232, 233 of 29 Cal.2d, 174 P.2d 441. In the Pacific Vegetable case it was said (page 240 of 29 Cal.2d, 174 P.2d, 449): ‘The purpose of the law in recognizing arbitration agreements and in providing statutory means of enforcement is to encourage persons to avoid delays by obtaining adjustment of their differences by an agency of their own choosing. This was pointed out in Utah Construction Co. v. Western Pacific R. Co., 174 Cal. 156, 159, 162 P. 631, 633, where it was also said: ‘The statutory provisions for a review thereof are manifestly for the sole purpose of preventing the misuse of the proceeding, where corruption, fraud, misconduct, gross error, or mistake has been carried into the award to the substantial prejudice of a party to the proceeding. * * * Therefore every reasonable intendment will be indulged to give effect to such proceedings.’ Citing authorities. See, also, Moore v. Griffith, 51 Cal.App.2d 386, 388, 124 P.2d 900; Dugan v. Phillips, supra, 77 Cal.App. 268, 278, 246 P. 566.'

Unless reserved by the terms of submission, an arbitrator has full power to decide questions of law as well as fact which directly or indirectly arise in considering and deciding the questions embraced in the submission ‘for, in the absence of such reservation, the parties are presumed to agree that everything, both as to law and fact, which is necessary to the ultimate decision, is included in the authority of the arbitrator.’ 6 C.J.S., Arbitration and Award, § 48 b; 3 Am.Jur. 923, sec. 92; see, a Nno., 112 A.L.R. 874; 17 Cal.L.Rev. 643, 660. Where the submission to the arbitrator is unqualified, his findings on questions of law as well as on questions of fact are final and conclusive and may not be reviewed by the court except for fraud or similar misconduct or unless error appears on the face of the award. In re Frick, 130 Cal.App. 290, 292, 19 P.2d 836; Glesby v. Balfour, Guthrie & Co., Ltd., 63 Cal.App.2d 414, 417, 147 P.2d 60. In Utah Const. Co. v. Western Pac. Ry. Co., 174 Cal. 156, page 160, 162 P. 631, 633, it was said: ‘An award made upon an unqualified submission cannot be impeached on the ground that it is contrary to law, unless the error appears on its face and causes substantial injustice.’

The law favors arbitration. The modern arbitration law, enacted first in New York in 1921 and in California in 1927 (Code Civ.Proc., secs. 1280–1293), was passed at the behest of business men and business trade associations for the express purpose of providing for self-regulation in business and industry and of making a submission to arbitration valid and irrevocable and with the idea that the courts must enforce them. 46 Harv.L.Rev. 1258, 1262. The proceeding is one before a tribunal selected by the parties in lieu of an action or proceeding for a judgment in an established tribunal of justice. Its object is to avoid, what some feel to be, the formalities, the delay, the expense and vexation of ordinary litigation. It is a substitute for an action in court. It depends for itx existence and for jurisdiction of the parties and subject matter upon the voluntary agreement of the parties, the submission. It is subject to limitation only by express provision of law. Formerly the courts were disposed to look with jealousy upon arbitrations. The recent authorities encourage them. Snyder v. Superior Court, 24 Cal.App.2d 263, 267, 74 P.2d 782.

The submission is a binding contract. The parties agree to be bound by the decision of the arbitrator as to questions of law as well as of fact. Under statutes similar to ours, providing for the summary entry of judgment on the award, it has been held, if the statutory provisions have been complied with, that the court becomes charged with the ministerial duty of entering judgment on the award. 6 C.J.S., Arbitration and Award, § 129. Our statute, Code of Civil Procedure, section 1287, says that, upon application for confirmation, the court ‘must’ grant such an order (confirming the award) unless the award is vacated, modified or corrected, as prescribed in sections 1288 or 1289.

If they were required to do so at all, it was in the proceeding before the arbitrator that respondents were bound to establish that they were licensed contractors. The statute does not require them to set that fact forth in the agreement to arbitrate or in the application to the superior court for confirmation of the award. All that is essential in the submission is agreement to submit to arbitration. Code of Civ.Proc., sec. 1281. All that is necessary in the application to the court for confirmation is allegation of the agreement, of the appointment of the arbitrator, and of the award. Code Civ.Proc., secs. 1287, 1291. The application to the court for confirmation of the award is not the bringing or maintaining of an action for the collection of compensation within the meaning of section 7031 of the Business and Professions Code. It is in the nature of a motion for an order enforcing an award of compensation already made by the arbitrator. The affidavit of the attorney to the effect that no allegation or proof a contractor's license was made by respondents, or either of them, during the arbitration, may not be considered for two reasons: First, it does not set forth any one of the grounds prescribed by the statute for refusing to confirm the award; second, as the parties agreed to an unqualified, unrestricted submission, the award may not be impeached for an alleged error which does not appear on its face. The submission having been unqualified, the decision of the arbitrator was final and conclusive except as it was subject to vacation on one or more of the grounds prescribed by the statute. The question whether respondents, or either of them, were licensed contractors was not open to judicial review. As no one of the prescribed grounds for vacating the award was presented or urged by appellants in the superior court, the order of the judge confirming the award was right.

The order confirming the award and the judgment thereon are, and each is, affirmed.

VALLEE, Justice pro tem.

SHINN, Acting P. J., and WOOD, J., concur.