FIRESTONE PLANTATIONS COMPANY, by and thru its Managing Director, E. L. GARCIA, Appellant, v. SAMUEL HARE, Appellee.
APPEAL FROM THE JUDGMENT OF THE SIXTH JUDICIAL CIRCUIT COURT FOR MONTSERRADO COUNTY.
Heard: May 20, 2002. Decided: July 5, 2002.
- Arbitration is a special proceeding brought before the court on application arising out of an arbitral controversy, and is therefore governed by the provisions relating to special proceedings.
- A notice of motion shall specify the time and place of the hearing of the motion, the supporting papers upon which the motion is based, the relief demanded, and the grounds therefor.
- If a party making a motion fails to appear, the motion shall be denied provided that the motion papers are submitted to the court.
- If a party does not appear to oppose a motion or fails to furnish the papers demanded on due notice, the motion shall be granted on proof of due service of the notice and required papers.
- A party is required to appear and oppose a motion on the date and at the time stated in the notice for hearing of the motion.
- Notwithstanding the specification of a date, time and place for the hearing of a motion, a notice of assignment should be issued for the hearing of the matter on another date after the expiration of the time specified by law.
- On application, the court may stay an arbitration proceeding commenced or threatened on a showing by the applicant adversely affected thereby that “the controversy is not referable to arbitration”, or “the right to proceed to arbitration has been waived by the adverse party.”
- All issues of law raised in the pleadings must be decided by the trial judge before trial of the issues of fact, and a failure to do so is reason for the appellate court to remand the case for a new trial.
The appellee, whose tapping contract with the appellant had been terminated, and who had written to the appellant discharging it from all further claims, effective as of the date of the termination of the contract, filed a motion before the Civil Law Court for the Sixth judicial Circuit, Montserrado County, seeking arbitration of a claim of US$10,178.61 which he had allegedly suffered following the termination by the appellant of the contract between the parties. Upon failure of the appellant to appear on the date and time designated in the summons or to respond to the motion, the trial court entered a default judgment, ruled the matter to arbitration, and directed the parties to submit the names of their representatives to the arbitration board.
Subsequently, the appellant filed a resistance to the motion for arbitration as well as a motion to rescind. In the latter motion, the appellant contended that the trial judge had violated the statute since the time specified in the summons and the hearing of the motion to arbitrate specified a date and were conducted before the expiration of the ten-day period allowed by statute for the filing of a responsive pleading. The appellant contended that the action by the trial court deprived it of its day in court. The trial judge denied both motions, holding that the proceeding was in the nature of a special proceeding and that therefore it was not governed by the provision of the statute relied on by the appellant. From this ruling, the appellant appealed to the Supreme Court.
The Supreme Court agreed that the proceeding was one in the nature of a special proceeding and that it was therefore not governed by the statutory provision allowing a respondent ten days for the filing of a response, and that the writ of summons which was served on the appellant specified, as required by law, the date, time and place for the hearing of the motion to arbitrate. The Court opined, however, that upon the failure of the appellant to appear as specified in the summons, the trial court should have ordered a notice of assignment issued for hearing of the case on another day, and ruled that a failure of the trial court to do so was error, and a deprivation of the appellant of its day in court.
The Supreme Court also held the trial court in error for its failure to pass on the issue of the release pleaded by the appellant in the motion to rescind. The Court noted that the appellant had pleaded the expiration of the contract and the release issued by the appellee in its favour. The Court ob-served that under the law all issues of law raised in a pleading must be passed upon by the trial judge and that a failure to comply therewith renders the judge’s ruling reversible. Accor-dingly, the Court reversed the trial court’s ruling on the motion to rescind and ordered the said court to resume jurisdiction over the case and conduct a hearing on the release.
F. Musah Dean and G. Moses Paegar of Sherman and Sherman, Inc. appeared for the appellant. M Kron Yangbe of the Cooper and Togbah Law Firm appeared for the appellee.
MR. JUSTICE MORRIS delivered the opinion of the Court.
The certified records in this case revealed that the appellant and the appellee executed the fourth and final of a series of tapping contracts on July 26, 1999 for a period of three months, commencing from July 26, 1999 up to and including October 25, 1999. Under the terms of the contract, the appellee was authorized to carry on tapping activities at appellant’s Division Number 10. The appellant informed the appellee of the termination of the contract, effective October 26, 1999. Thereafter, on November 1, 1999, the appellee wrote the appellant expressing his gratitude to the appellant for granting him the privilege to serve as tapping contractor for fourteen (14) months. In the aforesaid communication, the appellee also relinquished all of his rights as appellant’s contractor and discharged the appellant from any further claim, effective as of October 26, 1999.
On the 26th day of September, A. D. 2000, the appellee filed a six-count motion to compel arbitration at the Civil Law Court, Sixth Judicial Circuit Court, Montserrado County, sitting in its September, A. D. 2000 Term, presided over by His Honour Varnie D. Cooper, Sr., Assigned Circuit Judge. In count 3 of the motion, the appellee alleged that the appellant had interfered with its workers by promising to give them rice, but that it had failed to honor the promise. This interference, the appellee alleged, had resulted in a loss to him of US$10,178.61. In counts 4 and 5 of the motion, appellee also alleged that he requested the appellant for arbitration relative to his claim, pursuant to sections 15,16 and 17 of the contract which provided for the settlement by arbitration of any claims or disputes arising out of the contract notwithstanding the termination of the contract. He alleged that the appellant had refused to submit itself to arbitration, and that it was in consequence of that refusal that he had filed his motion to compel the appellant to submit itself to arbitration in order to have his claim heard and settled.
On the 26th day of September, A. D. 2000, the clerk of the Civil Law Court, upon orders of the trial judge, issued a writ of summons commanding the appellant to appear on October 2, 2000 to answer the motion. The order and writ stated that a default judgment would be rendered against the appellant upon its failure to appear. The sheriffs returns showed that the writ of summons was duly served on the appellant on the 27th day of September, A. D. 2000 and returned served. On October 2, 2000, the trial court, upon the default of the appellant, ruled the parties to arbitration and ordered both parties to submit the names of their representatives on or before the 16th day of October, A. D. 2000, to be appointed to a board of arbitration. The judge also ruled that the represen-tatives of the parties should appoint the chairman of the board of arbitration, and that the trial court would thereupon proceed to qualify them for arbitration of the claim.
The records indicate that on October 7, 2000, the appellant filed a seventeen-count resistance to the motion to compel arbitration, and a seven-count motion to rescind. The appellant contended that under the law an appearance shall be made within ten(10) days after service of summons or re-summons, the same being consistent with section 3.62 of the Civil Procedure Law. The appellants asserted further that the judge’s order and a writ of summons providing for appellant’s appearance in less than ten days deprived it of its day in court since a default judgment was rendered against it for its failure to appear on the earlier date and time appointed in the writ of summons. The appellant also contended in count 4 of its motion that the day designated in a writ of summons for appearance covered the entire day, and that a default judgment could not have been rendered due to its nonappearance because it could have filed its responsive papers at any time during the 24 hour period of the day appointed for its appearance. Also, in count 6 of the motion, the appellant alleged that the agreement under which the appellee claimed the right to arbitration had not only expired, but also that the appellee had issued a release discharging and releasing the appellant from all claims under the agreement. As such, the appellant maintained, the arbitration could not lie in the face of its release and discharge by the appellee.
The appellee filed a six-count resistance to the motion to rescind the ruling of October 2, 2000. He basically contended that a motion to compel arbitration is not a regular action, but rather a special proceeding under section 64.15 of the Civil Procedure Law, which can be heard in the manner and upon notice as provided in chapter 10 relative to the making and hearing of motions. The appellee maintained that the appear-ance of the appellant within ten days, as required by section 3.62 of the Civil Procedure Law, was inapplicable in the current arbitration proceeding, and that the failure of the appellant to appear for the hearing on the date and at the time designated was not a ground to grant a motion to rescind the ruling of the trial judge. In count 6 of his resistance, the appel-lee also argued that the parties could submit to arbitration notwithstanding the termination of the contract, as provided for under clause 17 thereof. He further contended that he did not know of his loss at the time he wrote the letter of release on November 1, 1999, and that the said letter did not legally constitute a release in the absence of any consideration. The appellee therefore prayed the trial court to deny the motion to rescind its ruling of October 2, 2000.
On the l6th day of November, A. D. 2000, the trial judge ruled denying the appellant’s motion to rescind his earlier ruling of October 2, 2000, stating as the ground for the denial that the motion to compel arbitration was a special proceeding, and that section 3.62 of the Civil Procedure Law, Rev. Code 1, relied upon by the appellant in its motion to rescind was not applicable. The appellant excepted to this latter ruling and announced an appeal to this appellate court, upon a twelve-count bill of exceptions. This Court deems counts 8, 9, 10 and 12 to be worthy of consideration. In count 8 of the bill of exceptions, the appellant alleged that the trial judge had erred when he confirmed and affirmed his earlier ruling of October 2, 2000, compelling the appellant to submit to arbitration. In count 9 of the bill of exceptions, the appellant alleged further that the trial judge had erred when he ruled that the motion to compel arbitration fell under section 64.15 of the Civil Procedure Law and that it was a special proceeding under chapter 16, sub-chapter A of the said Civil Procedure Law, and that therefore section 3.62 of the Civil Procedure Law, which required a party to make his appearance within a specified statutory time after the service upon him of a writ of summons, did not apply. In addition, the appellant averred in count 10 of the bill of exceptions that the trial judge had also erred when he determined that the contract was valid and effective after its termination, in spite of the appellant’s contention that the appellee had waived all claims against the appellant arising out of or relating to the said contract. In count 12 of the bill of exceptions, the appellant contended that the trial judge had denied it its day in court when he denied its motion to rescind his ruling of October 2, 2000, which ruling compelled it to submit itself to arbitration.
During the argument of the case, both parties raised and strenuously argued several issues before this Court. However, we consider the below issues to be relevant for the determi-nation of this case. The issues are as follows:
(1) Whether the trial judge erred in his ruling of November 16, 2000 when he failed to pass on the issue of release, as contained in appellee’s letter of November 1, 1999?
(2) Whether or not the trial judge committed a reversible error when he granted a default judgment on October 2, 2000 against the appellant for its failure to appear and oppose appellee’s motion for arbitration?
We shall decide these above stated issues in the reverse order. With regard to the issue of default judgment, the appellant contended that it was required under section 3.62 of the Civil Procedure Code to appear within ten (10) days, as of tile date of service of the writ of summons on September 26, 2000, and that the trial judge denied it its day in court when he granted a default judgment on October 2, 2000, a period of less than ten (10) days from the date of service of the summons. The appellant also averred that a default judgment should not have been granted on October 2, 2000 since the appellant should have filed its responsive pleading on October 2, 2000, the day of its appearance, as contained in the judge’s order and the writ of summons.
The appellee, on the other hand, contended that arbitration proceeding is special in nature and must be heard and determined summarily. He also contended that the appellant had notice of the hour, day and place for hearing of the motion, but that it had failed to appear on October 2, 2000, having admitted service of the writ of summons on it on September 27, 2000, ordering the appellant’s appearance on October 2, 2000.
Section 64.15 of the Civil Procedure Law provides, inter alia, that “[a]ll applications to the court under this chapter shall be by motion and shall be heard in the manner and upon the notice provided in chapter 10 of this title or by rule of court for the making and hearing of motions in actions or special proceedings. A special proceeding shall be used to bring before a court the first application arising out of an arbitral controversy unless under section 64.17 a motion is required to be made in a pending action in a circuit court in which an arbitral controversy is involved”.
It is clear from the language of the above quoted statutory provision that an arbitration proceeding is a special proceed-ing in nature which shall be brought before a court, as in the instant case, upon an application arising out of an arbitral controversy. This statutory provision also states that the application or motion shall be heard in the manner and upon the notice provided in chapter 10 of this title. Hence, to decide whether or not the appellant defaulted in opposing the motion on October 2, 2000, we take recourse to chapter 10 of the Civil Procedure Law, the relevant section of which we here-under quote for the benefit of this opinion.
“10.4. Motion Papers.
1. Notice of motion. A notice of motion shall specify the time and place of the hearing on the motion, the supporting papers upon which the motion is based, the relief demanded, and the grounds therefor”.
“Section 10.7. Default on motion. If the party making a motion fails to appear, the motion shall be denied provided the motion papers are submitted to the court. If the party does not appear to oppose a motion or fails to furnish the papers demanded on due notice, the motion shall be granted on proof of due service of the notice and required papers”.
It is clear and this Court is convinced, as the records before us indicate, that the notice of the motion to compel arbitration clearly stated and specified the time and place of the hearing of the motion, which was October 2, 2000, at the precise hour of 10:00 a.m. We hold that the appellant was required to appear and oppose the said motion on October 2, 2000, as specified in the notice for the hearing of the motion to compel arbitration. Notwithstanding, a notice of assignment should have been issued for the hearing of the matter on another date after the expiration of October 2, 2000 as the laws of this land direct. We therefore hold that the appellant was not afforded its day in court. Hence, counts 9 and 12 of appellant’s bill of exceptions are sustained.
The last and final issue for the determination of this case is whether the trial judge erred in his ruling of November 16, 2000 when he failed to pass on the issue of release as contained in appellee’s letter of November 1, 1999?
The answer to this question is yes. The appellant conten-ded in count 6 of its motion to rescind the ruling of October 2, 2000 that the agreement had expired and that the appellee had executed a release discharging and releasing the appellant from all claims under the contract, and that arbitration could therefore not lie. The records in this case revealed that the appellee had written to the appellant on November 1, 1999, discharging it from all claims. The relevant portion of the said letter is hereunder quoted for the benefit of this opinion.
“I relinquished all rights as a Firestone contractor and have no claim on the company, effective October 26, 1999.”
The appellee’s letter of November 1, 1999 was pleaded by the appellant in its motion to rescind the ruling, as exhibit R12. The appellee resisted count 6 of the appellant’s motion, contending that said letter was not a release since there was no consideration, and also since the appellee did not know of his loss at the time he wrote the letter. We observed from the records in the case that the trial judge did not pass upon this decisive issue in his ruling of November 16, 2000, although he did mention it in passing as a contention of the appellant. The trial judge, pursuant to chapter 64, section 64.2(1) of the Civil Procedure Law, was obligated to order arbitration if the issues were found for the moving party, appellee, herein, as he rightly did in his ruling of October 2, 2000. However, section 64.2(2)(d) also provides for proceedings to stay arbitration. It states that upon application made, the court may stay an arbitration proceeding commenced or threatened on a showing by an applicant adversely affected thereby that:
“(c) The controversy is not referable to arbitration, or
(e) The right to proceed to arbitration has been waived by the adverse party”.
It was incumbent upon the trial judge, therefore, to pass upon the issue of the release in his ruling of November 16, 2000 on the motion to rescind. This was a paramount issue to be determined by the trial judge. In Cooper v. Davis, [1978] LRSC 57; 27 LLR 310 (1978), this Court held that “[a]ll issues of law raised in the pleadings must be decided by the trial judge before the trial of issues of fact, and failure to do so is reason for the appellate court to remand the case for new trial.” The trial judge therefore committed a reversible error when he denied the appellant’s motion to rescind his ruling of October 2, 2000 without passing upon the issue of release to determine whether or not the controversy was referable to arbitration.
In view of the foregoing, the trial judge’s ruling denying appellant’s motion to rescind the ruling of October 2, 2000 is hereby reversed. The Clerk of this Court is hereby ordered to send a mandate to the trial court instructing the judge presiding therein to resume jurisdiction over the case and proceed to hear the issue of release and thereafter proceed with this case in keeping with law. Costs of these proceedings are to abide the final determination of this case. And it is hereby so ordered.
Ruling reversed.