Dawson v. Winslow
Dawson v. Winslow, Wythe 114 (1791), was a case about whether a borrower was still required to pay a penalty when the lender's fraudulent actions made on-time payment impossible, and whether courts of law and equity can overturn an arbitrator's decision.
Dawson bought 150 acres of land from Winslow in September 1783 for £200. The form of Dawson's payment came in two bonds: one for £100, the other for £150 - the extra £50 was to be a penalty if the bonds weren't paid on time. Dawson had two ways to avoid the penalty: He could avoid the penalty on the second bond by paying the £100 in full by December 25, 1783; or, by February 10, 1784, Dawson could present Winslow with a £100 bond Winslow had given to Henry Garrett. However, Winslow had gotten Garrett to agree not to give Dawson his bond until after February 10, 1784. Garrett told Dawson that Garrett planned to sell the bond to Garth, and told Dawson to go to Garth to get the bond. Dawson bought the bond from Garth and tried to deliver it to Winslow, but Winslow went into hiding to avoid delivery on time, and made a claim on the bond for the £150 penal amount. Winslow also removed a memorandum attached to the penal bond that described how Dawson could satisfy the bond by presenting the bond in Garrett's possession, but did present the memorandum to the arbitrators.
Dawson and Winslow agreed to take their case before an arbitration panel. The arbitrators allowed Winslow or his attorney to read Winslow's statement of the case at the hearing, over Dawson's objections. Dawson brought two witnesses for his side to the hearing, but the arbitrators did not call on them. The arbitrators proceeded to award Winslow roughly £55 plus interest and costs.
The Court's Decision
The High Court of Chancery declared that Winslow committed fraud and that the arbitrators acted in a way that required their award to be set aside. The HCC issued a perpetual injunction against the arbitrators' judgment and awarded costs to Dawson.
The Supreme Court of Appeals of Virginia declared that the HCC's perpetual injunction went a bit too far, since Dawson still owed Winslow a bit more than £3, not including the penalty. The SCAV agreed, though, that Winslow's actions relieved Dawson from having to pay the £50 penalty.
Wythe admitted that the HCC should have excluded the roughly £3 from its perpetual injunction. Wythe then looked at what he considered the case's main issue: whether a court of equity has the power to relieve someone from an award that violated equitable principles. Wythe argued that since a party agrees to abide by an arbitrator's decision, to disagree with an arbitrator's verdict is to disagree with oneself, which is why traditionally arbitrators' decisions cannot be appealed to the judicial system. Wythe cited the Digest of Justinian and Demosthenes's oration against Midas to show that there has been a longstanding tradition of the finality of arbitrators' decisions. Nevertheless, Wythe concluded, there are circumstances when a court can abrogate an arbitrator's award, such as:
- When one party bribes the arbitrator, or
- When an arbitrator is biased against one party, or
- When an arbitrator does not hear both parties, or takes insufficient time to reach a conclusion, or
- When the arbitrator's award exceeds the norms to the extent that one could only infer that the award was the result of corruption or an improperly rushed decision.
Wythe concludes by pondering whether the SCAV's decision had the effect of making all courts of equity appellate courts for arbitrators' decisions.
- George Wythe, Decisions of Cases in Virginia by the High Court of Chancery, 114 (Richmond: J.W. Randolph, 2d ed. 1852).
- Winslow v. Dawson, 1 Va. (1 Wash.) 118 (1792).
- Wythe 119, citing Dig. 17.2.76, 4.8.19.