Loving & Evans v. Blick

SHENK, J.

I dissent. The parties executed a building construction contract providing for arbitration in the event of disagreement. A controversy ensued. The owner and the contractor entered into a separate agreement submitting the entire controversy to settlement by arbitration. By that agreement and the submission to arbitration the owner became bound by the award subject to the power of the superior court to vacate it for causes stated in section 1288 of the Code of Civil Procedure. Pursuant to section 1281 of that code all of the factual and legal issues were properly submitted to the arbitrator. Evidence on all of the issues was introduced and considered by the arbitrator and the award was based thereon. Therefore when no fraud, misconduct or corruption is involved and the arbitrator has proceeded in accordance with his authority no excess of his powers has been shown and the merits of the controversy are not reviewable. (Pacific Vegetable Oil Corp. v. C. S. T., Ltd., 29 Cal.2d 228 [ 174 P.2d 441 ].) Such an award is “according to the legal right of the parties.” That qualification in the contract of arbitration should not be deemed to create an exception to the general rule so as to empower the court to review the issues before the arbitrator as on an appeal from a judgment rendered in the superior court. The *616 parties may not by agreement bestow such additional power upon the court. Arbitration is a substitute for an action and trial in court, and the power of the court to set aside the award is very properly limited by the provisions of title X, part 3 of the Code of Civil Procedure. Any implication from language in Utah Construction Co. v. Western Pac. Ry. Co., 174 Cal. 156 [ 162 P. 631 ], to the effect that the parties may extend the judicial power is dictum and should not be deemed persuasive in view of the determination in Pacific Vegetable Oil Corp. v. C. S. T., Ltd., supra.

The majority opinion has attempted to resolve the problem as though it might involve an unlawful contract or a contract contrary to public morals and therefore void. It may be assumed that a law declaring such contracts illegal may not be circumvented by submitting controversies thereunder to arbitration and obtaining court confirmation. But the contract here is not of that nature. There is nothing basically unlawful or contrary to public morals in a contract to construct or repair a building. Evidence dehors the contract is necessary to determine whether the activity which it evidences was or was not permissible under the law. The statute does not declare such a contract to be unlawful. The declaration of unlawfulness is confined to engaging in the business or acting in the capacity of a building contractor without having secured a license. (Bus. & Prof. Code, §§ 7028 et seq.) A person pursuing the activities of a building contractor without the required license is guilty of a misdemeanor. (Id., § 7030.) And such person may not maintain an action in any court of the state for the collection of compensation for building contractor services. (Id., § 7031.) These are the consequences attached to violation.

The statutory restrictions applicable to the contractor are for the protection of the owner. Considering the limited consequences of a violation the owner may properly be deemed to have waived the right to make the objection when he submitted the controversy to arbitration. The time when he had a right to urge in court the claimed unlawfulness was before, not after, he went into arbitration. The procedure for submitting that question to the court is provided for in section 1282 of the Code of Civil Procedure whereby a “party aggrieved by the failure ... of another to perform under an agreement in writing providing for arbitration may petition” the court “for an order directing that such arbitration proceed.” After . notice the court ‘ ‘ shall hear the parties, and upon being satis *617 fled that the making of the agreement or such failure to comply therewith is not in issue, shall make an order directing the parties to proceed to arbitration. ... If the making of the agreement” be in issue a trial is then had. On such trial the contractor must necessarily show that he was duly licensed. The outcome is either a dismissal or an order summarily directing that the parties proceed to arbitration. Under the facts in this case the owner passed the proceeding in which he could question the contract or the propriety of arbitration and voluntarily submitted the controversy on all issues to the arbitrator. In the absence of a showing sufficient to set aside the award under section 1288 he must be deemed to be bound by the award. To allow him to continue to rely on his objection after submitting the controversy to arbitration, introducing evidence, and proceeding to an award would permit him to speculate on the outcome and accept it if it is favorable and reject it if it is adverse. When, as here, all of the factual and legal issues have been considered on evidence brought into the arbitration proceeding and there is no reason to vacate the award for any of the causes enumerated in section 1288 of the Code of Civil Procedure it should be confirmed pursuant to the mandate of section 1287 of the same code. Furthermore in accordance with the policy favoring arbitration the proceeding to confirm an award is not an action in court as specified in the licensing statute. Certainly it is not an action as defined in section 22 of the Code of Civil Procedure. This seems to be conceded by the majority. As stated, arbitration is a substitute for such an action. It is an alternative remedy authorized by law and the motion to confirm the award is at most a special proceeding as defined in section 23 of the same code and is not an action. I would affirm the judgment.

Sehauer, J., concurred.