Norton v. Gale.

court, or before arbitrators or referees or appraisers, or before any other forum, I think the party to be affected thereby is entitled to be heard, if he demand it, and to that end is entitled to notice of the time and place of deliberation or investigation. A party may, no doubt, by contract or otherwise waive this right to notice, and that is the ground on which the cases, as I understand them, of McAuley v. Carter, 22 Ill. 53; Korf v. Lull, 70 id. 420, and like cases, rest, in which it is held notice need not be given in cases of building and construction contracts, where the matter to be determined was left to the engineers, superintendent or architect. In that class of cases, in view of the nature of the business, and of the fact that the question was left to the decision of an expert, whose ordinary duties, in the nature of things, gave him the full means of understanding the matter to be by him determined, it was held that by a fair construction of the contract the parties had waived this right to notice. In these decisions I fully concur. They do not invade the fundamental principle of common fairness and justice which pervades the law in all civilized communities, and which demands that in all proceedings — judicial or quasi judicial — the party to be bound thereby must have an opportunity to be heard, unless he has expressly or by reasonable or necessary implication waived that right."

"This view of the law has for its support decisions where this very question came in judgment.

**In Peters v. Newkirk, 6 Cow. 103, it appeared that Newkirk had leased to Peters certain premises for a period of three years, but before the time expired the parties agreed to cancel the lease and make a settlement of their accounts. The balance of rent due to Newkirk was agreed to be $87.75, for which Peters gave his due bill, and it was also agreed that Newkirk should take a shearing machine, to be appraised by C. Sturges, in part pay of the due bill. Sturges made the appraisement at $85 in the absence of Newkirk, who was not notified. Subsequently Newkirk made a distress for the $87.75 rent due, whereupon Peters tendered the balance of rent due, after deducting the $85, and demanded a return of the goods, which was refused, and he then brought an action on the case, for distraining his goods when no rent was in arrear, and upon the trial of this action the question arose whether the appraisement was valid, and upon this point the court say: 'The appraisal was irregular and not conclusive on the defendant. Both parties should have had notice, so that an opportunity might be afforded to submit their remarks to the appraiser, and adduce proof if deemed necessary. The plainest dictates of natural justice require that no man shall be condemned unheard. The right to notice was implied in the agree. ment to submit.'

"In Underhill v. Van Cortlandt, 2 Johns. Ch. 339, the defendants leased to Underhill a mill place and land for twenty-one years, and in the lease it was provided, that at the expiration of the term the mill or mills then standing, and whatever might appertain thereto, should be appraised or valued by two persons indifferently chosen by the parties, and in case of their disagreement, by a third person, to be chosen by the two, and the said appraisement should be binding on the parties.' Chancellor KENT, in his opinion, treats this agreement precisely as a submission to arbitration, and he applied to their conduct the same rules which are applied to the conduct of arbitrators.

"In Kelly v. Crawford, 5 Wall. 785, there was an agreement between two firms that an accountant should examine their books of account, and ascertain from them the exact amount due from one firm to the other, the amount so found to be due and owing to be final. It was held the agreement was not a submission to arbitration, nor was the amount found due by the accountant an award, in any such sense as would make them subject to the strict rules governing arbitrations and awards. The court made a distinction between a case where there is something submitted to the judgment or discretion of the person chosen, and one where he is to have no discretion

"In Thomas v. West Jersey Railroad Co., 24 N. J. Eq. 568, provision was made in a lease that it might be terminated by notice, and provision was made for determining, by arbitration, the damages to which the lessees might become entitied by the determination of the lease. The notice was given, and two arbitrators chosen, who, after hearing evidence and arguments, were unable to agree, and thereupon chose an umpire to act as third arbitrator. The three then met without notice to the parties, or giving them any opportunity to be heard. This action was held by the court to be misconduct, in the sense of the law, and fatal to the validity of the award.

Norton v. Gale.

"In Bushey v. Culler, 26 Md. 534, it appeared there had been a suit pending between the parties which was compromised by a contract, which provided Culler, who had a dam which caused the water to flow back upon Bushey's mill and land, should lower his dam to such an extent as should be judged necessary by Samuel Hargate and George Thomas, they to select a third person, in case of disagreement, who should determine how much the said dam should be lowered, and whose determination should be final and conclusive; and it was further provided, that at any time, within one year from such determination, Bushey should think the dam had not been sufficiently lowered, he might again apply to the arbitrators, who should examine the matter and make another determination. Under this contract the arbitrators made a decision requiring the dam to be lowered six inches, which decision was made without giving notice to either party, and without either party being present. The court held the decision was not valid, and, following the case of Bullit v. Musgrave, 3 Gill, 32, said: Where, from the nature of a submission, the judgment of arbitrators may be influenced or enlightened by the adductions of evidence, the parties are entitled to notice of the time and place of their proceeding to investigate the matters submitted to them.'

"In Dickenson v. Railroad Co., 7 W. Va. 390, a contract for the sale of land in Nicholas county, Virginia, provided that the vendor should convey it to the vendee ‘at so much per acre, as may be determined by Messrs. George Brown, Samuel J. Grose and Joseph Copenhaver, being disinterested and responsible land-owners in the said county, the price per acre to be certified by them on the back of this agreement.' The persons named in the contract made their valuation without notice to, and without the presence of, the vendee. The court held the valuation not binding, and the learned judge who wrote the opinion said: 'The certificate of valuation cannot be considered as more solemn, more conclusive or binding upon the parties than an ordinary award. It is but an award, and the referees cannot upon principle be considered otherwise than as arbitrators.' After citing and quoting from a large number of authorities, the opinion continues: From the weight of authorities upon the subject, and from such reflection as I have been able to exercise, my mind has been brought to the conclusion that sound principles, justice and a due regard for the proper administration thereof among men by arbitration, require, ordinarily, though not universally, in equity, that an award made by arbitrators in the absence of the parties to the submission may be set aside in equity.'

"In Billings v. Billings, 110 Mass. 225, a question arose between two parties as to the construction of a will, and they agreed to refer the point for decision to Henry Chapin, Esq. The referee made his decision without notice and without giving the parties an opportunity to be heard, and the court held his decision was void.

"In Brown v. Lyddy, 11 Hun, 451, a lease provided that in case of the renewal of a lease the rent, if not agreed upon by the parties, was to be ascertained as follows: Each party 'shall choose a disinterested person to ascertain the same, which persons so chosen shall themselves, respectively, be owners in fee simple of one or more lots of land in the neighborhood of the one hereby demised, and shall, in making their award or determination in the said premises, under oath, appraise and value the said lot or lots of land hereby demised, at its or their full and fair worth or price at private sale,' etc., and it was also provided that in case the two could not agree an umpire was to be chosen by them whose decision under oath should fix and determine the value. The two arbitrators chosen failed to agree, and chose an umpire, who made his award without having given the parties notice of the time and place of hearing, and without taking any proofs. Upon this point the court say: 'The appraisers were to ascertain the value, but in what manner is not stated, whether by the exercise of their own knowledge and judgment or by a hearing, at which the parties could produce witnesses. The word 'ascertain,' however, has its meaning, and therefore its force: To make sure or certain; to fix, to establish, to determine; to settle,' are definitions of that word according to Worcester, and this would seem to demand the observance of the usual mode of investigation in order to determine- to settle the value. The right of the parties to a hearing * ** is one of the established priv fleges, although it may be waived by them. The courts would not declare that such right did not exist, unless the terms of the submission so provided or a waiver was clearly demonstrated.'

"There are other cases carrying this doctrine farther, holding that even where by the

agreement of the parties the amount or value of work done under a contract is to be determined by an engineer or other expert, a determination made by him without notice to the parties will not be binding. Among these are the following: McMahon v. New York & Erie Railroad Co., 20 N. Y. 463; Collins v. Vanderbilt, 8 Bosw. 313. On this latter ques tion the authorities are not in harmony, and this court has taken a different view, and in which I fully concur. But my attention has not been called to any case where matter requiring the exercise of judgment and discretion (on the part of the persons by whose judgment the parties have agreed to be bound), and such persons are not selected as experts, in which the decision of such persons has been held binding upon a party who has not had an opportunity to be heard."

CITY OF CHICAGO V. GAGE.

(95 III. 593.)

Surety — on official bond signed and delivered in blank — effect of not filing in specified time — entries of principal as against surety.

One who as surety signs and delivers an official bond with blanks as to the name and term of office, the penal sum, date, names of other sureties, and the like, impliedly consents that such blanks may be subsequently filled by the principal, and the obligee's knowledge that the bond was thus deliv ered does not prevent his recovery upon it, although the penal sum inserted was greater than that limited by the oral agreement of the surety and prin. cipal.*

A statutory provision that an official bond shall be filed within a specified time or the officer shall be deemed to have refused the office, and the same shall be filled by appointment, is merely directory.

Where a financial officer is his own successor, his entries of balances in his hands at the expiration of his first term, made in pursuance of legal require. ment, are conclusive on himself and his sureties on his bond for the new term.

A

CTION of debt against principal and sureties, upon a city treasurer's bond, given on his re-election. When signed and delivered the bond was blank as to names of other sureties, penal sum, date, name and term of office, and was signed by some of the sureties with the declaration that they should not be bound if the penalty exceeded a certain amount, nor unless the co-sureties were satisfactory. The penalty exceeded the specified amount, and all the blanks were filled, and the execution completed without consultation with the sureties. The city charter provided that all

* Consult Allen v. Marney (65 Ind. 398), 32 Am. Rep. 73; Nash v. Fugate (32 Gratt. 595), 24 Am. Rep. 780.

City of Chicago v. Gage.

bonds required from city officers should be filed within fifteen days after election or appointment, or in default thereof the officer should be deemed to have refused the office, and the same should be filled by appointment in a certain manner. The opinion states other facts. The plaintiff had judgment below.

Francis Adams and Sidney Smith, for appellant.

Wait Dexter, Lawrence, Campbell & Lawrence and John N. Jewett, for appellees.

SHELDON, J. It is insisted by appellants that the instrument in question is a nullity as to the sureties, they having signed it with the blanks in it which it had, and those blanks being subsequently filled without their consent or knowledge, and the case of People v. Organ, 27 III. 29, is referred to in support of the position. That case does decide, that the filling the blank in a bond with the amount of the penalty, after the sureties had executed it, without their knowledge or consent, rendered it void, as to them. But that decision was made under, and in conformity to, the ancient doctrine of the common law that an authority to execute a sealed instrument for another must be of as high a character as the instrument, and therefore that a parol authority was not adequate to authorize an alteration or addition to a sealed instrument; the decision recog. nizing as the rule that a paper signed and sealed in blank, even with verbal authority to fill the blank, which is afterward done, is void as to the parties so signing and sealing, unless they afterward deliver, or acknowledge, or adopt it. Among the cases there cited in support of the decision was that of United States v. Nelson, 2 Brock. 64, decided by Chief Justice MARSHALL. That was the case of a paymaster's official bond. There were blanks there which were filled after signing, and they were identical with those here, to wit: amount of penalty, names of sureties, date, and name of office. The question was whether authority to fill the blanks should be implied, and that great judge, with mnch hesitation, held that it should not. But he admitted that express authority would have been sufficient, and asserted that but for the ancient distinction between sealed and unsealed instruments in this regard, implied authority would exist; that Speake v. United States, 9 Cr. 28 (where an express parol authority had been declared

City of Chicago v. Gage.

sufficient), undoubtedly went far toward establishing the sufficiency of implied authority in such cases, and he predicted that the Supreme Court would probably completely abolish the distinction in this particular between sealed and unsealed instruments, and concluded his opinion as follows: "I say with much doubt, and with a strong belief that this judgment will be reversed, that the law on this verdict is in my opinion, with the defendants." The prediction, as will be seen, has been verified, though the judgment was not reversed, the case not having been carried any further.

In Smith v. Crooker, 5 Mass. 538, Chief Justice PARSONS, in the case of the official bond of a town treasurer, laid down the rule in general terms, that a party executing a bond "knowing that there are blanks in it to be filled up by inserting particular names or things, must be considered as agreeing that the blanks may thus be filled after he has executed the bond." Although that was but the case of the writing in of the name of the surety after he had signed the bond, the rule is laid down generally, and is the one which courts subsequently have declared, and which agrees with, as we consider, the now prevailing doctrine.

Butler v. United States, 21 Wall. 272, decided by the Supreme Court of the United States in 1874, was a suit upon an internal revenue collector's bond in the penalty of $15,000, executed by Emory as principal, and by Butler and others as sureties. Butler pleaded that when he signed and sealed the bond it was a printed form, with names, dates and amount of penalty in blank; that he delivered it to Emory under an express agreement that the latter should fill the blanks with a penalty of only $4,000, and procure two other sureties in the District of Columbia, each worth $5,000, otherwise the bond was not to bind Butler, and not to be delivered, but returned to him. That Emory fraudulently filled the bond with a penalty of $15,000, and with two additional sureties, neither of whom resided in said district or was worth $5,000, but insolvent. This plea was held bad.

The court say: "Every blank space in the form was open. To all appearances any sum that should be required by the government might be designated as the penalty, and the names of any persons signing as co-sureties might be inserted in the space left for that purpose. It was easy to have limited this authority by filling the blanks, and the filling of any one was a limitation to that extent. By inserting in the appropriate places the amount of the penalty,