as to defaults which may depend on matters of law as well as of fact. How far in substance does the case differ from the following: 2. In return for a promise of A to build according to specifications, B promises to pay $10,000 if C thinks A entitled to so much, in view of any default of either party in the performance of the contract. 3. For the same promise by A, B promises to pay $10,000, and C's determination of any question in dispute shall be final and a condition precedent to any right of action. 4. For the same promise by A, B promises to pay $10,000, and it is mutually agreed that all matters in dispute shall be left to C's determination which shall be final. § 1724. Agreements to arbitrate should be enforced. One who examines the cases will probably reach the conclusion that the criticism of the law concerning agreements to arbitrate made by Judge Hough,66 is well founded except where the agreement is oppressive or unfair to one of the parties, as where an arbitrator is agreed upon who is either a party or so identified with one of the parties as to be unlikely to render an unbiased judgment.67 The statutes with reference to arbi 6 See supra, § 1719, and infra, n. 68. 67 In White v. Middlesex R. Co., 135 Mass. 216, the plaintiff brought action to recover $65 deposited by him with the defendant corporation under a written agreement providing, among other things, that the plaintiff, who was about to enter the defendant's employ as a conductor, should, upon entering such employ, deposit the sum of $65 to be retained by the defendant, together with interest accrued thereon and all wages that might be due him, as security for the proper discharge of his duties; that, in case of a breach by the plaintiff, the defendant's president "shall be the sole judge between the company and the conductor whether the company is entitled to retain the whole or any part of said $65 and interest, and all wages that may at any time be due him, as liquidated damages." The action was held maintainable though the president adjudged that the railroad was entitled to retain the whole deposit. The court held the provision of the contract invalid. See, however, the almost identical case of London Tramways Co. v. Bailey, L. R. 3 Q. B. D. 217, where the judgment was for the company. See also Wilson v. Glasgow Tramways & Omnibus Co., 5 Sc. Sess. Cas. (4th ser.), 981, and Glasgow Tramway & Omnibus Co. v. Dempsay, 3 Coup. Just. 440, and consider also decisions upholding contracts whereby an architect or engineer of one of the parties is given authority to decide questions in dispute between them, supra, §§ 794– 798; also cases of contracts to pay for tration in many jurisdictions certainly preclude the idea that the settlement of disputes in that way is undesirable.68 Even the requirement of the form of a condition precedent as a requisite for denying relief by legal proceedings until arbitration has been had, savors of excessive technicality; for the nature of the provision necessarily indicates that the intention of the parties can be effectuated only by regarding the stipulation as a condition. A promise in a contract to give a bond for the securing performance of other promises in the contract is held to create a condition precedent to liability on the other promises, because otherwise the stipulation would be ineffective. goods or services if satisfactory to the purchaser or employee, supra, § 44. In Chicago, B. & Q. R. Co. v. Healy, 76 Neb. 783, 786, 107 N. W. 1005, 111 N. W. 598, 10 L. R. A. (N. S.) 198, 124 Am. St. Rep. 830, the plaintiff's intestate was employed by a railroad company and had entered into a contract that if he should accept certain benefits provided in a relief department of the company, he would forfeit all right to sue for damages. His widow accepted benefits from the relief department but, nevertheless, was allowed to sue as administratrix. 68 In United States Asphalt Refining Co. v. Trinidad Lake Petroleum Co., 222 Fed. 1006, 1011, Hough, J., said: "The English Arbitration Act has compelled the courts of that country to abandon the doctrine that it is wrong or wicked to agree to stay away from the courts when disputes arise. It is highly characteristic of lawyers that, when thus coerced by the Legislature, the wisdom of previous decisions begins to be doubted. In Hamlyn v. Talisker Distillery, [1894] App. Cas. 202, Lord Watson said: 'The rule that a reference to arbiters not named cannot be enforced does not appear to me to rest on any essential considerations of public policy. Even if an opposite inference were deducible from the authorities by which it was established, the rule has been so largely trenched upon by the legislation of the last 50 years. that I should hesitate to affirm that the policy upon which it was originally based could now be regarded as of cardinal importance. In Brocklehurst & Potter Co. v. Marsch, 225 Mass. 3, 113 N. E. 646, the court said: "There is doubt about the validity of any arbitration clause which would constitute one party to a dispute a member of a board of arbitration to pass upon his own claims. Arbitration implies the exercise of the judicial function. An arbitrator ought to be free from prejudice and able to maintain a fair attitude of mind toward the subject of controversy. It would be a travesty upon all ideas of judicial propriety or of judicial work for a man to be an arbitrator to settle the amount of his own liability. It is contrary to natural right and fundamental principles of the common law for one to judge his own cause. Pearce v. Atwood, 13 Mass. 324; Strong v. Strong, 9 Cush. 560, 570; McGregor v. Crane, 98 Mass. 530. See in this connection Hickman v. Roberts, [1913] A. C. 229; Bristol Corp. v. Aird, [1913] A. C. 241, 247, 248, 254, 255. There is nothing in Fox v. Hazelton, 10 Pick. 275, which gives countenance to the contention that an agreement to submit a controversy to the decision of a party can be sustained." It is a condition implied in fact.69 Somewhat similarly it may fairly be argued a provision for arbitration of disputes under a contract can only be effective if the arbitration precedes litigation rather than follows it.70 § 1725. Limiting parties to particular courts or procedure. The right of a party to legal redress if he is injured is jealously guarded by the courts, and generally no agreement purporting to deprive a party of the right to sue in a Federal court,71 or in * See supra, § 893. 70 Two Massachusetts decisions illustrate the importance attached to stating in terms that the provision for arbitration is a condition precedent. In Reed v. Washington Ins. Co., 138 Mass. 572, the action was brought upon an insurance policy in the form prescribed by the Massachusetts statute. The policy contained the following provision: "In case any difference of opinion shall arise as to the amount of loss under this policy, it is mutually agreed that the said loss shall be referred to three disinterested men, the company and the insured each choosing one out of three persons to be named by the other, and the third being selected by the two so choosen, provided that neither party shall be required to choose or accept any person who has served as a referee in any like case within four months; and the decision of a majority of said referees in writing shall be final and binding on the parties." At the conclusion of the plaintiff's evidence, the judge declined to rule, as requested by the defendant, that the plaintiff could not recover without evidence of a reference to arbitration. This ruling was sustained by the full court on the ground that the clause was not expressed as a condition precedent. See also Clement v. British American Ass. Co., 141 Mass. 298, 5 N. E. 847. In Lamson Store Service Co. v. Prudential Ins. Co., 171 Mass. 433, 50 N. E. 943, the action was brought upon a policy in the form prescribed by a later Massachusetts statute (St. 1887, c. 214, § 60). The policy contained a clause similar to that quoted above, except for the following added words, "and such reference, unless waived by the parties, shall be a condition precedent to any right of action in law or equity to recover for such loss." The court held that the words constituted a valid condition precedent to the plaintiff's right of action. ... 71 "It was held in Home Ins. Co. v. Morse, 20 Wall. 445, 22 L. Ed. 365, that a statute making it a condition precedent to the granting of the privilege to a foreign corporation to do business within a State, that it would not remove suits from State to Federal courts, was unconstitutional and a contract to that effect was invalid. This point was reaffirmed expressly in Doyle v. Continental Ins. Co., 94 U. S. 535, 24 L. Ed. 148. This principle has been followed in numerous decisions of Circuit and District Federal courts. Prince Steam-Shipping Co. v. Lehman, 39 Fed. 704; Slocum v. Western Assur. Co., 42 Fed. 235; The Etona, 64 Fed. 880; Gough v. Hamburg Amerikanische Packetfahrt Aktiengesellschaft, 158 Fed. 174; United States Asphalt Refining Co. v. Trinidad Lake Petroleum Co., Ltd., 222 Fed. 1006." Nashua River Paper Co. v. Hammer deed in any way confining the right of a party to bringing action in a particular court, or in the courts of a certain jurisdiction,72 will be enforced. For the same reason a provision in a mortgage that a mode of sale therein set forth should "be exclusive of all others" was held ineffectual; 73 and perhaps somewhat unnecessarily a provision of a by-law adopted as part of mill Paper Co., 223 Mass. 8, 15, 111 N. E. 678, L. R. A. 1916 D. 691. See also David Lupton's Sons Co. v. Automobile Co., 225 U. S. 489, 56 L. Ed. 1177, 32 S. Ct. 711; Dunlop v. Mercer, 156 Fed. 545, 551, 86 C. C. A. 435. 72 In Nashua River Paper Co. v. Hammermill Paper Co., 223 Mass. 8, 15, 111 N. E. 678, L. R. A. 1916 D. 691, the court said: "It was held in Benson v. Eastern Building & Loan Assoc., 174 N. Y. 83, 86, 66 N. E. 627, in substance that parties cannot in the ordinary case by contract deprive courts of competent jurisdiction of their power to adjudicate causes on the ground that that jurisdiction is prescribed by law and it cannot be increased or diminished by agreement of parties. "In Mutual Reserve Fund Life Assoc. v. Cleveland Woolen Mills, 82 Fed. 508, 27 C. C. A., 212, 214, it was said by Lurton, J.: 'The policy [of insurance]. . . contained a stipulation that no suit in law or equity should be brought upon it except in the Circuit Court of the United States. This provision, intended to oust the jurisdiction of all State courts, is clearly invalid. Any stipulation between contracting parties distinguishing between the different courts of the country is contrary to public policy, and should not be enforced.' v. Iowa Mutual Aid Association, 81 Iowa, 135, 46 N. W. 857, 25 Am. St. Rep. 483; Indiana Mutual Fire Ins. Co. v. Routledge, 7 Ind. 25; Bartlett v. Union Mutual Fire Ins. Co., 46 Me. 500; Reichard v. Manhattan Life Ins. Co., 31 Mo. 518; First Nat. Bank of Kansas City v. White, 220 Mo. 717, 737, 120 S. W. 36; Baltimore & Ohio R. R. v. Stankard, 56 Ohio St. 224, 46 N. E. 577, 49 L. R. A. 381, 60 Am. St. Rep. 745; Healy v. Eastern Building, etc., Assoc., 17 Penn. Super. 385, 392, 393." See also United States Asphalt Ref. Co. v. Trinidad Lake Petroleum Co., 222 Fed. 1006; Kuhnhold v. Compagnie Générale, 251 Fed. 387; Blair v. National Shirt and Overalls Co., 137 Ill. App. 413; Nute v. Hamilton Ins. Co., 6 Gray, 174; Buel v. Baltimore, etc., R. Co., 24 N. Y. Misc. 646, 53 N. Y. S. 749; McLean v. Tobin, 58 N. Y. Misc. 528, 109 N. Y. S. 926; Darling v. Protective Assur. Soc., 71 N. Y. Misc. 113, 127 N. Y. S. 186; Savage v. People's, etc., Sav. Assn., 45 W. Va. 275, 31 S. E. 991. In Mittenthal v. Mascagni, 183 Mass. 19, 66 N. E. 425, 60 L. R. A. 812, 97 Am. St. Rep. 404, however, the court refused to allow an action in Massachusetts on a contract made in Italy for a service of fifteen weeks in the United States, where the contract provided that suit should be brought in Italy, if any dispute upon the contract arose between the parties. See also Daley v. People's Building &c. Assoc., 178 Mass. 13, 59 N. E. 452. 73 Guaranty Trust &c. Co. v. Green Cove Springs &c. R., 139 U. S. 137, 11 S. Ct. 512, 35 L. Ed. 116. |