Petition for a Writ of Certiorari — Harleysville Mutual Insurance v. Johnson

- Se EPEAT — ss

“UPREME COURT. U. &

in the Supreme Court of the

Ynjted States

October Term, 1968

No.

"918

OSCAR JOHNSON

VS.

HARLEYSVILLE MUTUAL INSURANCE

COMPANY,

Petitioner

PETITION FOR A WRIT OF CERTIORARI TO

THE SUPREME SOURT OF PENNSYLVANIA

AND TO THE SUPERIOR COURT OF PENN-

SYLVANIA

PavuL A. LocKREY,

Attorney for Petitioner.

1922 P.N.B. Building,

Broad and Chestnut Streets,

Philadelphia, Penna. 19107.

"Saran DRS a SAL TIERS NES EEE: PE EEE EERE: — EITM. SS

Murrell Company. Law Printers, 201-286 Lockhatt Steest, Seyve, Pa.

Josoph F. Heffernan, Philadelphia Representative, MU 6-5602

L2G BARNET 2S NEY I OE — iE wt,

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INDEX

Opinions Below .......---s++eeeeeererseersseet ts

Jurisdiction ............cceecceccccscerececcccees

Questions Involved ........--+++eseeeeeertettetes

Constitutional Provisions ......---+++++sssssseeeee

Statement of the Case:

A. The background of the lower court litigation

B.

C.

The case concerns a matter of general im-

POTEAMCE 2.0... cee ccsccrcccecreececreceess

Jurisdiction of the court is invoked under 28

UGG. 1957(B) ..... cc ccccccccrsscccvcveens

Petitioner contends that the actions of the

State Courts have impaired the obligations of

— and violated its right to due process

" 5 VERIO RTO rer rere Te TT tT ee

_ Arbitrations that are held in the Accident

Claims Tribunal of the American Arbitration

Association by virtue of submission under the

uninsured motorist endorsement of the stand-

ard automobile liability policy issued within

this Commonwealth are arbitrations under the

Pennsylvania Arbitration Act of April 25,

1927, P. L. 381, 5 P.S. 161 et seq. ....------

. The decision in Harleysville vs. Adair is not

in conflict in any way with the Pennsylvania

case law that has been developed in regard to

arbitration in Pennsylvania ......-------:-

. For a court to refuse to apply decisions that

have already construed the meaning of a

statute that affects contractual remedies is to

impair the obligations of contract contra to

the Pennsylvania Constitution and is a denial

i

19

it asia

Oe ee ee

of due process of law age by the

Fourteenth Amendment of the United States

COIN bv viccnen Ueseuveesbsteeenes ces 36

H. A party to an arbitration must have access to

the courts at some stage. If he cannot chal-

lenge jurisdiction at the beginning or during

the process, he must under due process con-

cepts be able to make his challenge at the end

or when the award is filed ................ 41

I. The conduct of arbitrations under the unin-

sured motorist endorsement in the American

Arbitration Association presumes as part of

the basic procedure that the Pennsylvania

Arbitration Act applies to this type of arbi-

IN os pc cau pce ras aoe nee ees eee. 44

Conclusion and Reasons for Granting the Writ .... 49

APPENDIX:

Appendix A—Opinion Filed Oct. 11, 1967 ......... 50

Appendix B—Opinion Filed March 20, 1968 ....... 54

Appendix C—Letter Dated Sept. 25, 1968 ......... 57

Appendix D—Constitutional Provisions Relied Upon 58

Appendix E—Letter Dated Nov. 1, 1968 .......... 59

Appendix F—Letter Dated Nov. 14, 1968 .......... 60

TABLE OF CITATIONS

CasEs :

A. J. Curtis Co. vs. D. W. Falls, Inc., 305 F. 2d 811

| Oo | Serer reer er err er ee 31

Beaver Co. B. & L. Association vs. Winovich, 323

Pa. 483, 187 A. 481 at 489 ........-.. cece eee 37, 38

Brinkerhoff-Farris Trust and Savings Co. vs. Hill,

Mo. 1928, 50 S. Ct. 451, 281 U.S. 673, 74 L. Ed. -

Serer rr errr errr rr Tr rere ce

Cohens vs. Virginia, U.S. 1821, 6 Wheaton 264 at 399,

oe I rrrrr tr ry rrr rr eres

Commonwealth vs. Drum, 58 Pa. De iviens canwuekss 22

Davis vs. Shaler Townrhip, 332 Pa. 134, 2 A. 2d 708

|) Sree ore tery tr re ryt 33, 34, 37, 38

Evans vs. Moffat, 388 Pa. 559, 131 A. 2d 141 (1957) 38

Farber vs. Perkiomen Mutual Insurance Company,

370 Pa. 480, 88 A. 2d 776 (1952) .......... 21, 38, 39

Finsilver, Still & Moss, Inc. vs. Goldberg, Maas & Co.,

Inc., 253 N.Y. 382, 171 N.E. 579 (1930) at page

RRS aan einen he Aer Cir ase

Oia tri dave kkssaeooes eee ne re Sp yer rer oe 39

Freeman vs. Ajax Foundry Products, Inc., 398 Pa.

457, 159 A. 2d 708 (1960) ............eeeeeeee 32

Galey vs. Guffey, 248 Pa. 523, 94 A. 238 (1915) .... 21

Goldstein et al. vs. International Ladies’ Garment

Workers’ Union, 328 Pa. 385, 196 A. 43 — fa a

Great Northern Railway Co. vs. Sunburst Oil & Re-

fining Co., Mont. 1932, 53 S. Ct. 145, 287 US.

358, 77 Ls. Ed. 360 .......ccncccccccvcccceeees 18

Harleysville Mutual Insurance Company vs. Adair,

421 Pa. 141, 218 A. 2d 791 (1966) .........--.

10, 11, 12, 13, 17, 19, 20, 21, 24, 25,

26, 27, 28, 30, 35, 40, 41, 43, 46

Hartmann Coal Mining Co. vs. Hoke, 157 F. Supp.

313 (E.D. Pa. 1957) .....cccccecccccevecvoees

Harwitz vs. Selas Corporation of America, 406 Pa.

539, 178 A. 2d 617 (1962) ....--- cere ee eeeeee

International Harvester Co. vs. Missouri, Mo. 1914,

34 S. Ct. 859, 234 U.S. 199, 58 L. Ed. 1276, 52

Xf a | ERAN err rere rs Por ee 18

Isaac et al. vs. Donegal & Conoy Mutual Fire Insur-

ance Co., 301 Pa. 351, at page 357, 152 A. 95

CRUD v0scesccnsans gt ee nana ed Tee ESARSOES 34

a a

J. A. Robbins Co., Inc. vs. Airportels, 418 Pa. 257,

210 A. 2d 896 (1965) ........ 30, 32, 34, 37, 46, 47, 48

Johnson vs. Harleysville, 212 Pa. Superior Ct. 89,

2 fe ee 17

Katakura & Co., Ltd. vs. Vogue S. H. Co., 307 Pa.

ye ee UD 5 4s 0k ede ca udeessa cess 36, 37

Keller vs. Local 249, 423 Pa. 353, 223 A. 2d 724

a Pre rar rerrr rr ree errr rrrre

Koslowski vs. Pennsylvania Threshermen, etc., 42

oe (a ee 35

Kraemer vs. Guarantee Trust ete. Co., 173 Pa. 416,

eS 8 rr rere eer rere 21

Matter of Harris (E. India Trading Co.), 16 Mise.

2d 87, 144 S. 2d 894 (1955) at page 89 ......... 43

Missouri ex rel. Missouri Insurance Co. vs. Gehner,

Mo. 1930, 50 S. Ct. 326, 281 U.S. 313, 74 L. Ed.

SEE ee en re LOAD ENE es fe ma 18

National Grange Mutual Insurance Co. vs. Kuhn, 428

2 & Fe 8 Fs errerrerr errr 47

New York Times vs. Sullivan, N.Y. 1964, 84 S. Ct.

710, 376 U.S, 254, 11 L. Md. 2d 686, 95 A.L.R.

PO re po eer ee) Pree Dae 21

Nirdlinger’s Estate, 290 Pa. 457, 139 A. 200 ....... 22

Owens vs. Concord Mutual Insurance Company, 210

Pa. Superior Ct. 235 (1967) ........... 12, 14, 25, 26,

28, 30, 41, 42

Pew Trust, 411 Pa. 96, 191 A. 2d 399 (1963) ....... 21

Philadelphia Trust vs. Northumberland County Trac-

tion Co., 258 Pa. 152, 101 A. 970 (1917) ........ 21, 38

S. F. Commissioners of Philadelphia vs. Philadelphia

et al., 324 Pa, 129, 188 A. 314 (1936) ..........

Waterhouse’s Estate, 308 Pa, 422,162 A. 295 ...... 22

Weyerhaeuser vs. Hoyt, 8th Cir. 1910, 31 S. Ct. 300,

219 U.S. 380, 55 3 2 rere 22

iv

ooo!

Sh nnn li: I

‘

CONSTITUTIONS:

U.S.C. Constitution, Amendment XIV, Section 1 ....

4, 5, 7, 17, 20, 40, 42, 58

see Pennsylvania Statutes Annotated Constitu-

ion:

a Fe an 5 So cvttecucsvuvcessxeass 37

ReG B TRIO TF ccccccccestveccescssane 7, 20, 58

Bt I Os ooo. c ous Ore dedecnesdueees 40

Statutes: Unitep States:

ee EE en apicc os ecdewceeeren ee canes 3, 17

28 U.S.C. Sup. Ct. Rule 27 .......ccccceeescccoens 14

PENNSYLVANIA:

Act of May 20, 1891, P. L. 101, See. 1, 12 Purdon’s

Penna. Statutes Annotated, Sec. 1100 ......... 3

Act of June 24, 1895, P. L. 212, Sec. 7(c) .......... 3

Act of May 5, 1899, P. L. 248, Sec. 1 .... .... ee eee 3

Act of March 2, 1923, P. L. 3, No. 2, Sec. 1......... 3

Act of April 25, 1927, P. L. 381, Sece. 7 & 10, 5

Purdon’s Penna. Statutes Annotateu, Secs. 167-

AA rep pee~ ee 10, 11, 12, 24, 36, 43, 44

Act of May 8, 1956, P. L. (1955) 1540, Sec. 1, 17

Purdon’s Penna. Statutes Annotated, Sec. 184 .. 3

Act of August 14, 1963, P. L. 909, Sec. 1, 40 Purdon’s

Penna. Statutes Annotated, Sec, 2000 .......... 8

PELE KATE CNEL CEN EL TET IN

CER ERD

Petition

IN THE SUPREME COURT OF THE

UNITED STATES

ca ae ee acum ee

October Termin, 1968

No.

Oscar Johnson

vs.

Harleysville Mutual Insurance Company,

Petitioner

PETITION FOR A WRIT OF CZRTIORARI TO THE

SUPREME COURT OF PENNSYLVANIA AND TO

THE SUPERIOR COURT OF PENNSYLVANIA

Petitioner prays that a writ of certiorari issue to re-

view the order of the Supreme Court of Pennsylvania

entered on September 25, 1968 refusing a petition for leave

to appeal to it from a decision of the Superior Court of

Pennsylvania and of the Superior Court of Pennsylvania

entered on March 20, 1968 affirming an order refusing to

open a judgment entered by the Court of Common Pleas

of Philadelphia County, Pennsylvania.

Opinions Below

OPINIONS BELOW

The decision of the Court of Common Pleas of Phila-

delphia County, Pennsylvania dated October 11, 1967 is

unreported and appears in this Petition as Appendix A at

p. 50. The decision of the Superior Court of Pennsyl-

vania dated March 20, 1968 is reported at 212 Pa. Sup.

Ct. 89, 239 A. 2d 829 (1968), and appears in this Petition

as Appendix B at p. 54. The order of the Supreme Court

of Pennsylvania dated September 25, 1968 is unreported

and appears in this Petition as Appendix C at p. 57.

Jurisdiction

JURISDICTION

The decision of the Court of Common Pleas of Phila-

delphia County, Pennsylvania dated October 11, 1967 re-

fusing to open a judgment entered by the prothonotary

of that court upon an award of an arbitrator was a final

order appealable under local statutes to the Superior

Court of Pennsylvania only because the amount in contro-

versy established jurisdiction in that court. Act of June

24, 1895, P. L. 212, Sec. 7 (c) of May 5, 1899, P. L. 248,

Sec. 1 of March 2, 1923, P. L. 3, No. 2, Sec. 1 of May 8,

1956, P. L. (1955) 1540, See. 1 as amended, 17 Purdon’s

Annotated Statutes, Sec. 184, Act of May 20, 1891; P. L.

101, See. 1, 12 P.S., Sec. 1100.

The decision of the Superior Court of Pennsylvania

which was entered on March 20, 1968 is a final order from

which no court proceeding of right exists in any state

court. (17 Purdon’s Annotated Statutes Sec. 190.) The

order of the Supreme Court of Pennsylvania refusing a

request by your petitioner for leave to appeal to it from

the decision of the Superior Court of Pennsylvania is a

final order from which no recourse lies to any state court

and upon its entrance, all remedies available to your peti-

tioner in the Commonwealth of Pennsylvania have been

exhausted. The jurisdiction of the Supreme Court of the

United States is invoked by your petitioner under 28 U.S.C.

See. 1257 (3).

Questions Involved

QUESTIONS INVOLVED

A corporation organized under Pennsylvania law and

qualified to issue and sell policies of insurance in that

state issues a policy to an insured who subsequently makes

a claim under one of the endorsements in that policy re-

quired to be offered to all purchasers by a state statute.

After negotiations fail, the matter is submitted to arbi-

tration before an arbitrator appointed by the American

Arbitration Association pursuant to an arbitration agree-

ment contained in the policy. The arbitrator makes an

award. The policyholder files the award as a judgment

in the prothonotary of the local court of Common Pleas

and the company files a petition in that same court for an

order, under the local practice opening the judgment in

order to allow it to file a petition for a review of the

arbitrator’s award as provided for by the state arbitration

Act of 1927. The company files this petition in reliance

upon the decision of the Supreme Court of Pennsylvania,

the highest court in the state, rendered in an earlier case

in which the company was involved, in which the Supreme

Court of Pennsylvania had been asked to interpret the

scope of the identical arbitration clause in issue in the in-

stant litigation and in reliance specifically upon the Su-

preme Court of Pennsylvania’s statement in that decision

that in cases arising out of this arbitration clause, review

could be had by filing a petition for review under the

specific sections of the Pennsylvania Arbitration Act of

1927 which the company set up in its petition to open the

Questions Involved

judgment. The lower court refuses to open the judgment.

The Superior Court of Pennsylvania affirms the lower

court decision and the Supreme Court of Pennsylvania re-

fuses to allow an appeal.

1. Does it violate the Fourteenth Amendment of the

United States Constitution for a lower, nisi prius, court

of the state to refuse to afford to such a corporation the

specific procedural relief which the highest court in the

state has specifically granted to it in an earlier freely

contested litigation involving the same insurance contract,

the same endorsement and the same arbitration clause?

2. Does it violate the Fourteenth Amendment of the

United States Constitution for an intermediate appellate

court.of the state, here the Superior Court of Pennsylvania,

to refuse upon a writ of certiorari to order a lower cour

to enforce the specific procedural relief which the highest

court in the state has specifically granted to a corporation

in an earlier freely contested litigation involving the same

insurance contract, the same endorsement and the same

arbitration clause?

3. Does it violate the Fourteenth Amendment of the

United States Constitution for the highest court in the

state, here the Supreme Court of Pennsylvania, when a

petition for leave to appeal to it from a decision of an

intermediate appellate court, here the Superior Court of

Pennsylvania, to refuse allocatur even though the petition

for such sets out clearly and unambiguously a claim of

denial of due process of law guaranteed by the Fourteenth

Amendment, and a claim that such refusal violates the

Pennsylvania Constitutional prohibition against impair-

ment of obligations of contract, and a claim that a refusal

Questions Involved

of such a review is a violation of the corporation’s right

to a jury trial guaranteed at some stage of an arbitration

proceeding by local case law where the jurisdiction of an

arbitrator has been challenged?

SE OE

Constitutional Provisions

CONSTITUTIONAL PROVISIONS

The provision of the Constitution of the United

States involved is See. 1 of the Fourteenth Amendment,

U.S.C. Const. Amend. XIV, See. 1. The provision of the

Pennsylvania Constitution involved is Purdon’s Penna.

Statutes Annotated, Const. Art. 1, Sec. 17. These provi-

sions are printed in Appendix D, infra, p. 58.

Statement of the Case

STATEMENT OF THE CASE

A. The Background of the Lower Court Litigation

Harleysville Mutual Casualty Company now Harleys-

ville Mutual Insurance Company, hereinafter called the

company, is a corporation organized under the laws of the

Commonwealth of Pennsylvania and qualified to write in-

surance policies in Pennsylvania and twenty-two other

states of the Union. Effective January 23, 1964, the com-

pany issued a policy called a Family Combination Auto-

mobile Liability Policy in a standard form approved by the

Insurance Commissioner of Pennsylvania tc Oscar John-

son for a premium charge. This policy contained along

with other endorsements one entitled ‘‘Protection Against

Uninsured Motorist.’’

This latter endorsement is a relatively new type of

coverage in which the insurer undertakes to pay the in-

sured directly for all losses that he may suffer due to bodi-

ly injury which occurs as a result of an accident involving

an uninsured motorist. The legislature of the Common-

wealth of Pennsylvania has by statute required this type

of coverage to be endorsed upon all automobile policies

issued in the Commonwealth of Pennsylvania unless the

insured rejects this coverage in writing. This legislative

mandate can be found at 40 Purdon’s Penusylvania Stat-

utes Annotated, Insurance Sec. 2000. A recently passed

statute (November, 1968) has amended this provision,

ttn

Stctement of the Case

making the coverage mandatory and removing the right of

the insured to reject the coverage (Authority unavailable).

The standard policy which Mr. Johnson contracted for

contained an arbitration clause as follows:

‘‘ARBITRATION. If any person making claim

hereunder and the company do not agree that such

person is legally entitled to recover damages from the

owner or operator of an uninsured automobile be-

cause of bodily injury to the insured, cr do not agree

as to the amount of payment which may be owing

under this Part, then, upon written demand of either,

the matter or matters upon which such person and the

company do not agree shall be settled by arbitration

in accordance with the rules of the American Arbitra-

tion Association, and judgment upon the award ren-

dered by the arbitrators may be entered in any court

having jurisdiction thereof. Such person and the com-

pany each agree to consider itself bound and to be

bound by any award made by the arbitrators pursuant

to this Part.’’

On June 24, 1964 Mr. Johnson was involved in an acci-

dent with a party alleged to be an uninsured motorist.

He started suit against this party in the local courts and

subsequently made a claim for damages against his own

insurance company, Harleysville Mutual Casualty Com-

pany, under the uninsured motorist coverage of his own

policy. The latter action is the subject of the instant

case.

Adjustment followed the claim; offers were made by

the company to settle the claim which were not acceptable

to Mr. Johnson and arbitration in the tribunals of the

10

Statement of the Case

American Arbitration Association under the arbitretion

clause of the contract was demanded.

An arbitrator heard testimony and eventually rendered

his award. Mr. Johnson filed this award with the Pro-

.thonotary of the Court of Commun Pleas of Philadelphia

County, Pennsylvania as a judgment of record and issued

attachment execution against the com, uny.

Whereupon the company filed a petition under ap-

propriate Ruies of Civil Procedure of Pennsylvania to open

the judgment in order to allow the company to file a peti-

tion under sections 7 and 10 of the Arbitration Act of 1927,

5 Purdon’s Statutes Annotated Secs. 167 & 170, for a

review of the arbitrator’s findings.

This petition to open the judgment relied specifically

upon a decision rendered by the Supreme Court of Penn-

sylvania in an earlier case, Harleysville Mutual Casualty

Company vs. Adair, 421 Pa. 141, 218 A. 2d 791 (1966).

Ian that case, which was a case of first instance in Penn-

sylvania, the identical arbitration clause quoted above and

the same policy endorsement was construed by the Su-

preme Court.

The Adair case arose out of a demand for arbitration

being made by an insured who had become an insured of

the company as a result of his being assigned to it from an

assigned risk pool. After Adair had become involved in

an accident, he demanded arbitration under the policy

contract. Prior to that he had refused to cooperate with

the company or to supply any information except a brief

statement dictated by his attorney and to submit to a physi-

cal examination which proved negative in all aspects.

11

Statement of the Case

After demand for arbitration was made, counsel for

the company insisted upon exercising the rights the peticy

gave to the compaxy to require the insured to submit to

examinations under oath as to facts of the accident and

of the damages claimed... Adair refused to answer any of a

set of standard locally used interrogatories or to submit to

examination vnder oath and insisted that the arbitration

proceed. Counsel for the company s2fused to proceed.

The arbitrator notified all parties that a hearing would be

held ex parte unless the company did proceed. Where-

upon counsel for the company brought an action in equity

in the Court of Common Pleas of Philadelphia County

seeking an injunction against Adair, the arbitrator and the

American Arbitration Association until such a time as

Adair should have complied with the requirements of the

policy contract in regard to submitting to examinations

under oath. The company vigorously contended in its

argument, and later in its appellate brief and argument,

that because arbitration awards were final and no review

was available, it had to have an opportunity, preliminarily,

to obtain information necessary to settle the case or to

arbitrate the claim or it would be prejudiced.

The lower court refused to enjoin the arbitration.

Whereupon the company appealed to the Supreme Court

of Pennsylvania. The Supreme Court of Pennsylvania re-

fused to allow interlocutory process such as a suit for an

injunction to interfere, preliminarily, with the conduct of

an arbitration of an uninsured motorist claim. The Su-

preme Court further held that the issue was purely one

of procedure and that since the Arbitration Act of 1927,

Secs. 7 and 10, 5 Purdon’s Statutes Annotated, Secs. 167-

170 provided a completed method of statutory relief by ap-

12

Statement of the Case

peal to a court to vacate, modify or correct an award, re-

course to equity was improper. The actual language used

in the decision is as follows:

‘‘Finally, the Arbitration Act of 1927, supra, Secs.

7 and 10, 5 P.S. 167, 170, provide a complete method

of statutory relief by appeal to the court to vacate,

modify or correct an award where the arbitrators ex-

ceed their powers, or refuse to hear evidence or by

misbehavior prejudice the rights of a a

Harleysville vs. Adair, 421 Pa. 141 at 146, 218

A. 2d 791 (1966).

The headnotes appended to this decision in the report are

entirely misleading and may be the source of much of the

trouble which attends the instant case.

Despite the specific reliance by the company upon the

procedural right granted to it in the Adair decision, to file

a petition under Secs. 167-170 of the Arbitration Act of

1927 for a review of the arbitration award in the instant

case, the lower court refused to open the judgment to allow

it to do so. The lower court, probably reading only the

headnotes of the Adair decision, held that Adair stood only

for the proposition that an injunction restraining arbitra-

tion until after completion of pretrial discovery was prop-

erly dismissed and that the references to review of arbi-

tration awards under the Arbitration Act of 1927 was

dicta and not controlling. It chose to hold that clear dicta

in the case of Owens vs. Concord Muiual Insurance Com-

pany, 210 Pa. Superior Ct. 235 (1967), to the effect that

if the parties do not agree to apply the Arbitration Act of

1927 to arbitration proceedings, common law rules apply

was controlling even in face of a specific holding in that

13

Statement of the Case

case that a party cannot submit to the jurisdiction of an

arbitrator and then contest his jurisdiction.

After the decision, the company appealed to the Su-

perior Court of Pennsylvania, an appellate court of limit-

ed jurisdiction. In its appeal to the Superior Court, the

company raised again its contention that it had a proced-

urai right as a result of the Adair decision to file a peti-

tion for review of the arbitrator’s award. Among the

arguments put forth, the company argued that to deny to

it this right to a procedural remedy was a denial of due

process of law under the Fourteenth Amendment of the

United States Constitution and a violation of the prohibi-

tion against impairment of obligations of contract set out

in the Pennsylvania Constitution and that access to the

courts must be open to a litigant in an arbitration pro-

ceeding either initially or subsequently to the award or a

serious denial of due process of law would ensue.

Despite this, the Superior Court of Pennsylvania re-

fused to reverse the lower court and affirmed the lower

court decision on a slightly different basis but refused to

recognize the procedural right granted to the company in

the Adair decision. The Superior Court of Pennsylvania

relied, evidently, largely upon the headnotes of the Adair

report and not on the thrust of that decision and on irrele-

vant later decisions of the Supreme Court of Pennsylvania.

Thereupon, the company filed a petition with the Su-

preme Court of Pennsylvania for leave to appeal to it from

ihe decision of the Superior Court of Pennsylvania. Such

an appeal is not a matter of right but of sufferance under

local statutes.

In this petition for allocatur to the Supreme Court

of Pennsylvania, the company again set out its reliance

14

Statement of the Case

upon the Supreme Court of Pennsylvania’s holding in

Adair and argued that there was an apparent conflict

between that decision and the decision of the Superior

Court of Pen»sylvania in Owens vs. Concord Mutual Insur-

ance Company (cited supra). The contention that the re-

fusal of the lower court and the Superior Court of Penn-

syivania to implement the procedural relief described in

Adair had denied to the company due process of law guar-

anteed by the Fourteenth Amendment of the United States

Constitution and had resulted in an impairment of obli-

gations of contracts contra to the provisions of the Penn-

sylvania Constitution was clearly and forceably set out in

this petition for allocatur.

On September 25, 1968 in a per curiam order without

an opinion, the Supreme Court of Pennsylvania refused

allocatur. This order is printed herein as Appendix C,

p. 57.

Your petitioner sought a supersedeas from the Su-

perior Court of Pennsylvania which was refused on No-

vember 1, 1968. This order is printed herein as Appendix

EK, p. 59.

Your petitioner sought a supersedeas from the circuit

justice of the United States Supreme Court under United

States Supreme Court Rule 27. This application was re-

fused by Mr. Justice Brennan on November 13, 1968. The

notice of this order is printed herein as Appendix F, p. 60.

Whereupon the company paid Mr. J ohnson, the plain-

tiff in the instant case, the full award, all accrued interest,

all costs including the costs of printing the appellate briefs

and now seeks a writ of certiorari from the Supreme

Court of the United States to review the actions of the

Set OR ROR ae

15

Statement of the Case

lower court, the Superior Court of Pennsylvania and of

the Supreme Court of Pennsylvania, which have, by un-

sophisticated and crude interpretations of a decision grant-

ing it a right to a specific procedural relief, denied to your

petitioner elementai justice by refusing to enforce that

right and then, in the specific instance of the Supreme

Court of Pennsylvania, by quite effectively, although ig-

nobly, extinguishing that procedural right by silence.

Se ee ne

16

Statement of the Case

B. The Case Concerns a Matter of General Importance

As stated in ‘part A above, all automobile liability

policies issued by any company in Pennsylvania must car-

ry an uninsured motorist endorsement. The vast majori-

ty of these policies contain an arbitration clause essential-

ly the same as the one involved in this case. These poli-

cies number into the millions. The petitioner’s policies

containing the arbitration clause involved in this case alone

run into the hundreds of thousands.

nen ae omen

.:

RUNS ies car ORT Bish aD ee

17

Statement of the Case

C. Jurisdiction of the Court Is Invoked Under

28 U.S.C. 1257(3)

A constitutional right to due process of law guaranteed

by the Fourteenth Amendment to the United States Con-

stitution was set up originally and inherently by the fil-

ing of a petition to open the judgment entered on the award

of an arbitrator in reliance on the decision of the Supreme

Court of Pennsylvania in the case of Harleysville vs. Adair

(cited above) and in conformity with standard Pennsyl-

vania practice rules. It could not be anticipated at that

time that the lower court would choose to misinterpret the

Harleysville vs. Adair (cited above) decision so as to de-

prive your petitioner of a specific procedural remedy

granted by the highest court of the State.

After the lower court refused to open the judgment,

your petitioner specifically raised the concept of denial! of

due process of law and impairment of obligations of con-

tract in its assignment of error and in its brief submitted

on appeal to the Superior Court of Pennsylvania. The

Superior Court of Pennsylvania ignored the constitution-

al issue. The assignment of error can be found in the

statement of questions involved and in argument IV and V

of the appellate brief on appeal printed, submitted and

argued before the Superior Court of Pennsylvania and

collected in the Paper Books appendix to the official re-

port of the decision in Johnson vs. Harleysville Mutual

Casualty Company, 212 Pa. Superior Ct. 89, 239 A. 2d 829

(1968).

After the Superior Court of Pennsylvania affirmed

the judgment of the lower court by its decision dated March

18

Statement of the Case

20, 1968, your petitioner filed a petition for leave to ap-

peal with the Supreme Court of Pennsylvania since there

exists under Pennsylvania law no right to appeal to that

court from a decision of the Superior Court of Pennsyl-

vania. In the petition for allocatur directed to the Su-

preme Court of Pennsylvania, your petitioner specifically

raised the issue of denial of due process of law and the

impairment of obligations of ccntract in Point One for Ap-

peal, Point Two for Appeal, Point Three for Appeal and

Point Six for Appeal. A copy of this petition for allocatur

can be found in the official transcript of the Record of the

Supreme Court of Pennsylvania filed in this case (R. 2).

Your petitioner feels that the claim of constitutional

rights was timely raised; but in addition, it relies upon the

case law which holds that even aside from the formal pre-

cise raising of claims for constitutional privilege, a claim

is properly raised if it is raised as soon as the imminent

deprivation of the privilege is threatened by the actions

of a state court.

Great Northern Railway Co. vs. Sunburst Oil and

Refining Co., Mont. 1932, 53 S. Ct. 145, 287

U.S. 358, 77 L. Ed. 360;

Brinkerhoff-Farris Trust and Savings Co. vs. Hill,

Mo. 1928, 50 S. Ct. 451, 281 U.S. 673, 74 L. Ed.

1107;

International Harvester Co. vs. Missouri, Mo.

1914, 34 S. Ct. 859, 234 U.S. 199, 58 L. Ed. 1276,

52 L.R.A. N.S. 525;

Missouri ex rel. Missouri Insurance Co. vs. Gehn-

er, Mo. 1930, 50 S. Ct. 326, 281 U.S. 313, 74 L.

Ed. 870.

ee TC. ALE TRCN 5 nea emptinmtnern 6 -

19

Statement of the Case

D. Petitioner Contends That the Actions of the State

Courts Have Impaired the Obligations of Contract and

Violated Its Right to Due Process of Law

Your petitioner emphatically states that it is not con-

tending that a reversal by a State appellate court of its

former holding has violated the constitutional guarantee

against impairment of obligations of contract. It is cog-

nizant of the holdings that such reversals of decisions do

not constitute such a violation of the constitutional guar-

antee contained in both the United States and the Penn-

sylvania Constitution.

Your petitioner does contend, however, that it has

suffered a serious impairment of obligations of contract

nevertheless as a result of the actions of the Court of

Common Pleas of Philadelphia County and the Superior

Court of Pennsylvania in refusing to allow it to pursue a

specific method of procedural relief to obtain a review of

the award cf the arbitrator under the Pennsylvania Arbi-

tration Act of 1927 which the Supreme Court of Pennsyl-

vania had granted to it in the Harleysville vs. Adair de-

cision (cited above).

No lower court can so deprive a citizen of a right to

relief by undertaking to reinterpret a decision of the high-

est court of the state and labelling a clear and unambigu-

ous holding dicta. It is in doing such a thing as this that

these state courts have denied your petitioner due process

of law and thereby have impaired the obligations of your

petitioner’s contracts both under the Fourteenth Amend-

ment of the United States Constitution and under Article

I, Section 17 of the Pennsylvania Constitution.

Statement of the Case

Likewise, it is in the refusal of the Supreme Court of

Pennsylvania to grant an allocatur despite the fact that

your petitioner raised a claim of constitutional privilege

both under the Fourteenth Amendment of the United

States Constitution and under Article I, Sec. 17 of the

Pennsylvania Constitution that an injustice has been

worked upon your petitioner and valuable contract rights

have been capriciously impaired.

Your petitioner emphasizes that it is not claiming that

the Supreme Court of Pennsylvania cannot reverse itself.

It is claiming that despite your petitioner’s efforts to

obtain review it did not, and it has not reversed itself on

its holding in Harleysville vs. Adair (cited above), and

until it does, no lower court has a right to refuse to grant

the relief that the Harleysville vs. Adair (cited above)

decision granted to your petitioner.

The thrust of the above argument has already been

recognized by the Supreme Court of Pennsylvania, Sink-

ing Fund Commissioners of Philadelphia vs. Philadelphia

et al., 324 Pa. 129, 134, 188 A. 314 (1936). In this case

the Supreme Court of Pennsylvania stated that: ‘‘That

which constitutes an impairment of the obligation of the

contract may also constitute a deprivation of due process.”’

That, ‘‘In both property rights may suffer.’? And that,

‘‘Therefore no order can be made by a court in the en-

forcement of a judgment which would, in violation of ‘due

process’ take from a litigant substantial property rights—

rights which may likewise be secured for him from legis-

lative interference by the impairment of obligations clause

of the Constitution.’’

The mere fact that the issue arises in civil litigation

does not limit the application of the due process concept.

Sw ee Le pis habdal die. rity

21

Statement of the Case

New York Times vs. Sullivan, N.Y., 1964, 84 S. Ct. 710,

376 U.S. 254, 11 L. Ed. 2d 686, 95 A.L.R. 2d 1412.

The Supreme Court of Pennsylvania by refusing al-

locatur does not in its own philosophy of law regard such

a refusal as an affirmation of the holding of the Superior

Court of Pennsylvania. It determines on its own whether

to allow an appeal or not to allow an appeal and there is

no inference permissible therefrom that a refusal of such a

leave to appeal has expressed a concurrence of the Su-

preme Court of Pennsylvania. Kraemer vs. Guarantee

Trust, etc. Co., 173 Pa. 416, 33 A. 1047 (1896).

Therefore, since I’ leysville vs. Adair (cited above)

still stands, the rights granted under it must be enforced

by lower courts in Pennsylvania.

The Supreme Court of Pennsylvania has in addition

held specifically that courts of the State cannot impair

obligations of contract any more than the legislature can

and that the Pennsylvania Constitutional prohibition ap-

plies to court decisions. Farber vs. Perkiomen Mutual

Insurance Co., 370 Pa. 480, 88 A. 2d 776 (1952). See

also Philadelphia Trust vs. Northumberland County Trac-

tion Co., 258 Pa. 152, 101 A. 970 (1917); and Galey vs.

Guffey, 248 Pa. 523, 94 A. 238 (1915).

The Supreme Court of Pennsylvania has recognized

in its decisions the very argument that counsel for your

petitioner made before the Superior Court of Pennsylvania

on appeal ‘hat in order to understand the H arleysville vs.

Adair decision, the full thrust of the litigant’s argument

must be considered. Pew Trust, 411 Pa. 96, 191 A. 2d 399

(1963).

22

Statement of the Case

In discussing dictum and its meaning, the court said,

‘Appellant is correct when he terms the afore-

said statement ‘dicta,’ but so far as concerns the Penn-

sylvania Rule of Equitable Apportionment of extra-

ordinary dividends and proceeds of sale of stock which

the majority therein abolished, it is as controlling as

if it were an indispensable part and parcel of the pre-

cise decision of the court on the actual issues in the

Catherwood Trust. Dictum which is contained in an

Opinion and not in a footnote, is sometimes as strong

and controlling as a decision on the merits; indeed

Opinions containing dicta are sometimes more care-

fully and thoroughly considered than some Opinions

which are restricted solely to the merits and others

which are ‘Per Curiam.’ ’? (Emphasis by the Court.)

The court goes on to discuss outstanding cases on

controlling dicta in Commonwealth vs. Drum, 58 Pa. 9;

Nirdlinger’s Estate, 290 Pa. 457, 139 A. 200, and Water-

house’s Estate, 308 Pa. 422, 162 A. 295, saying that these

were cases where the court set up clear guide posts by

means of dicta.

These views are old and well established. The Su-

preme Court of the United States has expressed like ideas.

Chief Justice Marshall expressed them in the very early

days of the Union. Cohens vs. Virginia, U.S. 1821, 6

Wheaton 264, at 399, 5 L. Ed. 257; see also Weyerhaeuser

vs. Hoyt, 8th Cir., 1910, 31 S. Ct. 300, 219 U.S. 380, 55

L. Ed. 258.

This is the very gist of your petitioner’s argument

already recognized by the Supreme Court of Pennsylvania

in its own decisional law. Yet when your petitioner re-

TS} TR . <amaeteemmanemieen —_

23

Statement of the Case

quested the Supreme Court of Pennsylvania to grant it

leave to appeal a decision of the Superior Court of Penn-

sylvania (Appendix B, p. 54) in the instant case on the

basis of this decisional law, the Supreme Court of Penn-

sylvania refused to do so (Appendix C, p. 57). This is

fundamental unfairness and a denial of due process of law

under the Fourteenth Amendment of the United States

Constitution.

24

Statement of the Case

E. Arbitrations That Are Held in the Accident Claims

Tribunal of the American Arbitration Association by

Virtue of Submission Under the Uninsured Motorist En-

dersement of the Standard Automobile Liability Policy

Issued Within This Commonwealth Are Arbitrations

Under the Pennsylvania Arbitration Act of April 25, 1927,

P. L. 381, 5 P.S. 161 et seq.

The Supreme Court of Pennsylvania in the decision in

the case of Harleysville Mutual Casualty Company, App.

vs. Adair, 421 Pa. 141, 218 A. 2d 791 (1966), held, inter

alia, that arbitrations held within the accident claims tri-

bunal of the American Arbitration Association by virtue

of submissions under a written agreement to arbitraie the

issues of the liability of the alleged uninsured motorist and

the damages which the insured had suffered as a result of

the uninsured motorist’s negligence contained in the un-

insured motorist endorsement of the standard automo-

bile liability policy written in the Commonwealth of Penn-

sylvania were arbitrations subject to the Pennsylvania

Arbitration Act of April 25, 1927, P. L. 381, 5 P.S. 161 et

seq. and that the parties to such an arbitration had a right

after the arbitration proceedings had terminated to appeal

to the Court of Common Pleas under the arbitration act

to vacate, modify or correct an award. The court cited

Sections 167 and 170 of the Arbitration Act as the sections

under which such an appeal could be filed.

Section 169 (5 P.S. 169) of the Arbitration Act is en-

titled ‘‘Motion to Confirm Award, Jurisdiction, Notice,’’

Section 170 (5 P.S. 170) of the Arbitration Act is entitled

‘‘Motion to Vacate Award, Grounds, Rehearing.’’ In Sec-

25

Statement of the Case

tion 170 four (4) grounds are set out under which relief

can be sought under the Arbitration Act. The appellant

in its rule and petition to the Court of Common Pleas in

the instant case specifically asked the court to open the

judgment which had been obtained by the appellee by fil-

ing the arbitrator’s award in the Prothonotary of the

Court of Common Pleas of Philadelphia County so that

the appellant could file a petition under Section 170 of the

Arbitration Act as the Pennsylvania Supreme Court said

it could do after the termination of the arbitration hearing

and the rendition of the award. The lower court despite

the citation of this authority refused to open the judgmext

holding that the arbitration under the uninsured motorist

endorsement was a common law arbitration.

In its opinion (Appendiz A, p. 50), the lower court

recognized that the decision in Harleysville Mutual Casu-

alty Company vs. Adair, supra, does state that the Arbi-

tration Act of 1927 does provide a method of statutory

relief but chose to consider this language dictum. The

lower court felt constrained by the holding of the Superior

Court in Owens vs. Concord Mutual Insurance Company,

App., 210 Pa. Superior Ct. 235, 232 A. 2d 14 (1967).

In the Owens vs. Concord Mutual case the discussion

relative to the Arbitration Act which occurs in the middle

of page 238 is itself clear dictum. Dictum has generally

been held to be

‘‘. .. that which is said in passing; a rule of law

set forth in a court’s opinion, but not involved in the

case; what is said by the court outside of the record

or on points not necessarily involved therein .. .’’

Law Dictionary, Ballentine, 1948 Ed.

26

Statement of the Case

The reference to the Arbitration Act in Owens vs. Concord

Mutual, supra, is in no way the basis of that decision.

The decision would be the same were the Act held to apply

or not as the Court intimates at the top of page 238 of the

decision because the case turns on the principle of choice

of forum and remedy. The principle for which the case

stands is clearly enunciated in the last two lines of the

majority decision (page 239) -vhich reads:

‘*. .. The company’s participation in the arbitra-

tion proceedings operates as a waiver of procedural

defects . . . It cannot appear in the arbitration pro-

ceedings and if unhappy with the award, attempt to

litigate all matters the second time before the courts.”’

In Owens vs. Concord Mutuel, supra, the company was

not seeking a review of the award for irregularities in the

arbitration, it was attacking the very jurisdiction of the

arbitrator after it had submitted to his jurisdiction.

In contradistinction to this type of situation, in the

Harleysville vs. Adair case, supra, the reference to the

Pennsylvania Arbitration Act of 1927 by the Supreme

Court is specifically tied into the very remedy which the

appellant there was seeking. In the Harleysville vs. Adair

case, supra, the company sought the aid of equity. Why?

As counsel repeatedly stated in the lower court as weil as

before the Bar of the Supreme Court of Pennsylvania be-

cause the award of the arbitrator was final. This is why

when information that the company needed to prepare for

a hearing would not be given by the claimant, the company

sought the assistance of the equity court to restrain the

holding of the arbitration hearing until that information

required by terms of the policy contract could be secured.

27

Statement of the Case

The company felt that if it went ahead it would be helpless

once the award had been entered by the arbitrator to alter

the result short of collusive fraud approaching criminality

on the arbitrator’s part. The Supreme Court knew that

this point, the finality of the award, was the issue. The

Court, however, was reluctant to allow interlocutory rul-

ings to interrupt a procedural scheme. We can read at

page 145 of the Harleysville vs. Adair decision, supra:

‘*To permit an equity action to be brought to re-

strain an arbitration proceeding in toto or to obtain

declaratory judgments as to procedural matters be-

cause of dissatisfaction with an interlocutory ruling of

the arbitrator would be unthinkable. No such injunc-

tive or declaratory judgment process is available in

an ordinary civil action at law as a means of challeng-

ing an interlocutory ruling by the court.”’

Harleysville Mutual Casualty Company vs. Adair,

421 Pa. 141, at 145, 218 A. 2d 791, 1966.

The analogy here is to ordinary court process. What

would not be tolerated in an ordinary court process would

not be tolerated in an arbitration scheme. Does this, then,

mean that the parties to such a sophisticated arbitration

scheme as uninsured motorist arbitration where skillful

attorneys represent claimants and companies before equal-

ly skillful attorneys sitting as arbitrators, where all the

techniques of trial are employed, witnesses examined at

length under oath, physicians interrogated on treatment,

diagnosis and prognosis are without any remedy because

the equity process and declaratory judgment process are

not available during the arbitration? Not at all! Because

as the Supreme Court says two paragraphs after the above

quoted portion:

Statement of the Case

‘Finally, the Arbitration Act of 1927, supra, §§7

and 10, 5 P.S. §§167, 170, provide a complete method

of statutory relief by appeal to the court to vacate,

modify or correct an award where the arbitrators ex-

ceed their powers, or refuse to hear evidence or by

misbehavior prejudice the rights of a party ...”

Harleysville vs. Adair, 421 Pa. 141 at 146, 218 A.

2d 791, 1966.

To hold as the lower court does that the latter quote

is dictum and the reference to the Arbitration Act in

Owens vs. Concord Mutual, supra, is a holding that fetters

the present appellant in his attempt to pursue his remedies

under the Arbitration Act is clear error not only in law

but in logical analysis. From the time of the Roman

jurists if not before, through Aquinas and the scholastics,

through the King’s Bench, through the long history of the

Pennsylvania Supreme Court, the inheritor of the King’s

Bench traditions and power it has always been held that

rights and remedies are coordinate. In Harleysville vs.

Adair, the company sought to exercise a remedy via the

equity court to protect a right under a contract. The

Supreme Court of Pennsylvania refused to allow that

right to be protected in an equity action started in the

midst of an uninsured motorist arbitration hut it stated

that that right could be protected by an application under

the Pennsylvania Arbitration Act of 1927 by a motion. to

vacate, modify or correct the award. This is all your pe-

titioner tried to do in this case, and the courts of Penn-

sylvania thwarted it at every turn by manipulating ideas

clear on their face to achieve a result not consonant with

the thrust of those ideas.

29

Statement of the Case

A State Supreme Court which, quite simply, says that:

‘No, sir! you do not have the right to enjoin that arbitra-

tion proceeding now since it has already started despite

your claim of prejudice; what you can do is go through

with the arbitration and then file a petition under the

Arbitration Act of 1927 to obtain a review of the arbitra-

tor’s findings,’’ is indulging in sophistry when the person

to whom that instruction has been given does just that !—

submits to an arbitration and then attempts to obtain a

review of the award of the arbitrator under the sections

of the Arbitration Act of 1927 and the lower courts refuse

to implement the remedy and then the same State Supreme

Court refuses to open the doors of its courtroom to such a

person. Yet this paraphrase is almost precisely what has

happened to your petitioner in the instant case. One is

reminded of the Mad Hatter’s rejoinder to Alice that

words mean what you wish them to mean.

If instead of your petitioner being an insurance com-

pany, it were an individual and if instead of your peti-

tioner being involved in a civil matter involving money, it

were involved in a criminal matter or a eivil right matter

there is little doubt in counsel’s mind that this Court

would be appalled at the arbitrariness of the proceedings

of which review is here sought. And yet, is not the basic

constitutional right to due process of law equally as ap-

plicable to civil procedure? And is not its erosion in the

civil procedure as detrimental to the common weal as its

erosion anywhere else?

30 ?

Statement of the Case

F. The Decision in Harleysville vs. Adair Is Not in Con-

flict in Any Way With the Pennsylvania Case Law That

Has Been Developed in Regard to Arbitration in Penn-

sylvania

If the cases since the passage of the Pennsylvania Ar-

bitration Act that have construed it or discussed its ap-

plicability or inapplicability to a situation are analyzed,

it is clear that the Supreme Court has recognized that

both statutory arbitration and common law arbitration

exists. Whether a given arbitration is held to have been

one or the other of the arbitration forms depends upon

factors inherent in the submission of the dispute. Some

eases off-handedly state that if the Arbitration Act is not

specified as applying to the arbitration then the arbitra-

tion is a common law arbitration. (Owens vs. Concord

Mutual (cited above).)

But that is not, nor has it ever been the rule. It is

only part of the rule. The other part which for some

reason does not get as much publicity as the above is that

reiterated by the Supreme Court as recently as in the de-

cision in John A. Robbins Company, Inc. vs. Airportels,

418 Pa. 257, 210 A. 2d 896 (1965), that the common law

form of arbitration exists absent a specific agreement re-

ferring to the Arbitration Act unless the parties expressly

or by implication agree that the act applies (page 261 of

decision).

In the Robbins vs. Airportels case, supra, the court

cites four cases as the authority for this distinction. Two

are Federal cases arising in District Courts in the Eastern

and Western Districts of Pennsylvania.

31

Statement of the Case

Hartmann Coal Mining Co. vs. Hoke, 157 F. Supp.

313 (E.D. Pa. 1957), turns on the lack in the record before

the court of anything that would indicate that the arbitra-

tion proceeding was had in conformity with the Pennsyl-

vania Arbitration Act of 1927 and therefore the Court

withheld a decision on the motion to dismiss and the contra

motion for summary judgment in order to give the plain-

tiff therein a chance to prove that the Court had juris-

diction.

A. J. Curtis Co. vs. D. W. Falls, Inc., 305 F. 2d 811

(8rd Cir. 1962), another case which turns on jurisdiction

of the Federal Court, is also enlightening on its facts.

The case concerns an agreement between two parties to a

commercial enterprise which failed and being unable to

settle the accounts between them, the parties invoked the

arbitration clause in their agreement. The arbitration

clause itself provided for a selection by the parties of

the arbitrators (page 812 of the decision). The agreement

did not mention the Pennsylvania Arbitration Act. The

arbitrators, by majority vote, made an award. The dis-

senting arbitrator filed a dissenting opinion. The award

was filed with the Prothonotary of a County Court of

Commen Pleas. ‘There was no action taken in the said

court by either the appellant or the appellees.’’ (page

813). Later A. J. Curtis and Co. sought removal of the

ease to the Federal jurisdiction. The appellate court (3rd

Cir.) citing Pennsylvania cases held that in addition to

the fact that the agreement in the joint ventures contract

failed to mention the Pennsylvania Arbitration Act of

1927 the parties did not follow the statutory procedure

(page 813 of decision) and that this would have been

fatal in a removal action even if the agreement had

32 .

Statement of the Case

been one within the scope of the Pennsylvania Arbitration

Act of 1927. Neither party had taken any action in the

local court or conducted the arbitration in any form

recognizable under the act and therefore since there was

nothing to indicate anything on the local level except a

common law arbitration, it could not be argued upon re-

moval to the federal jurisdiction that it was a statutory

arbitration. Here again the form and conduct of the arbi-

tration is the key.

Freeman vs. Ajax Foundry Products, Inc., 398 Pa.

457, 159 A. 2d 708 (1960), per curiam affirmance on the

opinion in 20 Pa. D. & C. 2d 128 (1959), was a case

where an inventor and a manufacturer entered into a

commercial venture to manufacture and sell a device. The

agreement contained an arbitration clause. The court,

after a long discussion of the law in Pennsylvania that has

arisen in regard to arbitration, held that it was not neces-

sary to determine whether the arbitration held under the

royalty agreement was under the Pennsylvania Arbitration

Act or at common law because there was nothing in the

record to indicate that the arbitration was intended to be

under the Act (page 134 of decision). Neither party tried

to follow the act, in short.

Finally—the Supreme Court of Pennsylvania cites the

case of Harwitz vs. Selas Corporation of America, 406 Pa.

539, 178 A. 2d 617 (1962), as authority for the proposition

that we must look to see wheiner the parties have express-

ly or by implication further agreed that the Arbitration

Act shall govern. This is the final case cited in the Rob-

bins vs. Airportels case discussed above. The Harwitz vs.

Selas Corporation case concerned a labor relations prob-

lem, un’sn grievance procedure and a litigious employee.

pe eS ed

onc

33

Statement of the Case

The Pennsylvania Supreme Court remarked (pages 542-543

of Pennsylvania decision) :

‘A careful review of the record convinces us that

the court below was correct when it concluded that

‘because the parties did not follow in any particular

the procedure outlined in the Arbitration Act of April

25, 1927 . . . and because there is no evidence, it is

manifest that the award of the arbitrators was a com-

mon law award’... .’’

The case of Goldstein et al. vs. International Ladies’

Garment Workers’ Union, 328 Pa. 385, 196 A. 43 (1937), a

frequently cited case in this field, gives a clue to the rea-

son why the Pennsylvania Supreme Court has been reluc-

tant to say as it did in J. M. Davis Company vs. Shaler

Township, 332 Pa. 134, 2 A. 2d 708 (1938), that after the

passage of the Arbitration Act all arbitrations must be

considered as being held under the terms of the act. At

page 393 of the Goldsteim decision we can read:

‘*Apart from the fatal failure to observe the pro-

vision of the Arbitration Act of 1927 in this respect,

[this respect refers to a proper determination by a

court if applied to of the arbitrator’s jurisdiction and

power to decide certain issues] the fact is as already

indicated, that that act is not adaptable to controver-

sies in which the relief sought is in the nature of a

mandatory decree... .’’

But this reluctance to apply the Davis vs. Shaler

Township case should not be interpreted as a prejudice

against the Pennsylvania Arbitration Act nor its applica-

tion. The Pennsylvania Supreme Court has repeatedly

ee eee ier wn aiaur

34

Statement of the Case

stated that the Pennsylvania Arbitration Act provides a

‘more effective remedy.”’

Isaac et al. vs. Donegal & Conoy Mutual Fire In-

surance Co., 301 Pa. 351, at page 357, 152 A.

95 (1930) ;

Goldstein et al. vs. International Ladies’ Garment

Workers’ Union, 328 Pa. 385, at page 395, 196

A. 43 (1937);

J. A. Robbins Co., Inc. vs. Airportels, Inc., 418

Pa. 257 at page 260, 210 A. 2d 896 (1965).

It is interesting that the case usually cited as limiting

Davis vs. Shaler Township, supra, the Isaac et al. vs. In-

surance Co. case (301 Pa. 351, 152 A. 95), was itself dis-

tinguished by the court speaking through Mr. Justice,

later Chief Justice Maxey in the following way in the

Davis v. Shaler case, supra:

‘¢. . . In the instant case the submission to ar-

bitration pursuant to the Act of 1927 [and this sub-

mission was by virtue of legislative act since the act

was not mentioned in the arbitration agreement]

adopts that act’s provisions for filling vacancies and

therefore the case cited in inapplicable. [The case

cited being Wolf v. Augustine, 181 Pa. 576, 37 A. 574.]

Appellant also cites Isaac et al. vs. Insurance Co... .

That case holds in respect to the Arbitration Act of

1927 that the act is not exclusive but does provide a

more effective remedy of prosecuting arbitration

agreements. The imstant case is an example of the

‘more effectiveness’ of the 1927 arbitration ‘remedy.’ ’’

(Emphasis and parenthetical comments supplied.)

(Page 139.)

cea ns ican Aim A Sra Dict aaa dem

35

Statement of the Case

The Court of Common Pleas of Washington County,

Pennsylvania in considering ‘‘Uninsured Motorist Cover-

age’’ held that arbitrations provided for in the standard

uninsured motorist endorsement of the approved auto-

mobile liability policy are arbitrations subject to the Act

of 1927 specifically because it is a more effective remedy

and it is to be preferred. Koslowski vs. Pennsylvania

Threshermen, etc., 42 Wash. Co. 76, 77 (1963). It is in

this vein of thinking that the decision in Harleysville vs.

Adair, supra, placed the uninsured motorist arbitration

agreement under the Arbitration Act of 1927 and granted

the parties the right to file petitions under appropriate

sections of the Arbitration Act of 1927 to vacate, modify

or correct an awavd.

36

Staiement of the Case

G. For a Court To Refuse To Apply Decisivas That Have

Already Construed the Meaning of 2 Statute That Affects

Contractual Remedies Is To Impair the Obligations of

Contract Contra to the Pennsylvania Constitution and Is

a Denial of Due Process of Law Guaranteed by the Four-

teenth Amendment of the United States Constitution

The very case in which the Pennsylvania Arbitration

Act of 1927 (cited above) was held to be constitutional,

Katakura & Company, Ltd. vs. Vogue S. H. Co., Appellant,

307 Pa. 544, 161 A. 529 (1932), would have, had the critevia

applied by the lower court in the instant case been there

applied, been thrown out of court.

In the Katakura vs. Vogue case, supra, a foreign

seller brought a petition under the Pennsylvania Arbitra-

tion Act to compel a buyer who would not pay for mer-

chandise sent to it to submit to arbitration berore the Silk

Association of America, Inc., a trade association organ, in

the silk industry. Despite the fact that counsel for the

buyer, Vogue, advanced argument after argument contest-

ing the applicability of the Pennsylvania Arbitration Act

of 1927, the court had no difficulty at all in holding that

the Act not only was constitutional but that a vetition by

one party to the -ontroversy under the Pennsylvania Ar-

bitration Act invoked the machinery of the Act. If the

paper books of the appellant in Katakura vs. Vogue, supra,

are read, there cannot be a ‘‘scintilla’’ of doubt that Vogue

Silk Hosiery Company, the defendant, and the appellant

upon appeal did contest, refuse, and with all the expletives

at the command of its counsel reject the Arbitration Act,

reject the applicability of that Act to the controversy,

reject the machinery of that Act as a way of solving the

ee ee “ senemaustaen

i ees

37

Statement of the Case

dispute between the parties and reject that Act as a viola-

tion of a Constitutional right to a trial by jury under the

Pennsylvania Constitution, Article 1, Section 6, P.S. Conat.

Vol. I, Art. 1 to 4.

In J. A. Robbins Co., Inc. vs. Airportels, Inc., 418 Pa.

257, 210 A. 2d 896 (1965), the Supreme Court of Pennsyl-

vania in rejecting an argument by counsel that since Air-

portels, inc. had by comisel stated at the outset of the

arbitration proceeding that it was preceeding in the hear.

‘ug under the Arbitration Act of 1927, the Act applied in

regard to the procedures for filing the award and for re-

view states that the ‘‘. . . appellee does not cite and we do

not know of any case where the unilateral act of cne of

the parties made the Act of 1927 applicable . . .’’ (at page

262). The Court need only refer to the Katekura vs.

Vogue Silk Hosiery Co., the very case that determined the

Act’s constitutionality for such a ease.

It is interesting to note that the Constitutional ques-

tion arose again in the Davis vs. Shaler Township case

(cited above) and that the Pennsylvania Supreme Court

in the Shaler decision ties in the constitutionality of the

Pennsylvania Arbitration Act of 1927 to the concept of

“‘opligation of contract’ citing from Beaver Co. B. & L.

Association vs. Winovich, 323 Pa. 483, at 489, 187 A. 481:

‘‘In determining what constitutes the obligation

of a contract, no principle is more firmly established

than that the laws which were in force at the time and

piace of the making of the contract enter in its ob-

ligation .. .’’

The Pennsylvania Supreme Court has held that judi-

cial acts can also be or result in an impairment of ob-

AMT AL DIL. lS A. i ha tee LE = ne as ae 6 sees Bb - ‘ ta TB, eee

38

Statement of the Case

ligation of contract, that the concept does not only apply to

legislative action. Farber vs. Perkiomen Mutual Insur-

ance Co., 370 Pa. 480, 88 A. 2d 776 (1952), at page 486,

after reviewing the actual cash value clauses of the stand-

ard fire policy said:

‘¢... The legal meaning of that clause having been

determined and established by prior decisions of this

court, we cannot now depart therefrom without im-

pairing the obligation of the contracts as written .. .’’

Likewise in Philadelphia Trust Company v. North-

umberland County Traction Co., 258 Pa. 152, 101 A. 970

(1917), a much earlier case, the Pennsylvania Supreme

Court stated a similar principle at page 166:

‘‘The constitutional provision, federal and state,

forbidding the impairment of the obligation of con-

tracts, lays its hand on the legislative department of

the government, but the principle has like force when

invoked for a similar purpose in the judicial depart-

Oe ks:

Aside from the doctrine of stare decisis which would

suggest as the present Chief Justice did in his concurrence

in Evans vs. Moffat, 388 Pa. 559, 131 A. 2d 141 (1957), that

a court should follow a decision that has been made in a

subsequent case where the facts are similar; the Pennsyl-

vania Supreme Court has already applied the principle of

‘obligation of contract’’ to the Pennsylvania Arbitration

Act of 1927. It has approved the principle set out in

Beaver Co. B. & L. Association vs. Winovich (cited above

and quoted above) as this principle was applied to the

Pennsylvania Arbitration Act by the court in the J. M.

Davis vs. Shaler Township case (cited above). The Su-

ee _ thecal thinnest nll <SaBl ah A iCal tol tah

39

Statement of the Case

preme Court also cited Fischer € Porter Co. vs. Porter,

364 Pa. 495, 72 A. 2d 98, quoting from that decision:

‘**the terms of a contract requiring the application of a

statute are to be construed according to their meaning as

used in the statute:’’’ see: Evans vs. Moffat, 388 Pa.

559, 131 A. 2d 141 (1957) at page 565, for this discussion.

Your petitioner had every right to rely on the con-

struction that the appellate courts had already given to a

statute especially when the thrust of that statute affected

basic contractual rights. A court has no warrant by label-

ling an appellate decision, dictum, to deprive a party be-

fore it of rights to remedies which these decisions have

granted to it. To do so is to impair the obligation of con-

tract in violation of the Pennsylvania Constitution and is

a denial of due process of law guaranteed by the United

States Constitution.

Insurance policy endorsements and coverages are

drafted with the exception of those of a few very large

national companies by national bureaus of underwriters.

The clear intent of this type of drafting is to allow, wher-

ever possible, for the incorporation of local contract and

tort law inio the contract. It is an almost commonplace

assumption that those laws of a state whose thrust alters

or molds the rights, duties and remedies set out in the

contract agreement are incorporated into that contract

when it is made. It may be a more subtle co~zept but it is

no less true that those statutory interpretations which

are made during the life of a contract or during the exer-

cise of rights or remedies arising out of a contract by the

Pennsylvania Supreme Court which construe the words of

a contract pertaining to the rights, duties and remedies set

out therein are also incorporated into a contract. And

40

Statement of the Case

when, for instance as in Harleysville vs. Adair (cited

above) and as in the cases ciied by your petitioner in sec-

tion G of this petition, an Act of the Legislature of Penn-

sylvania is construed so as to confer the rights and reme-

dies of that Act, in this case the remedies of the Arbitra-

tion Act of 1927, to a particular type or class of contracts,

in this case contracts of insurance containing a legislative-

ly required uninsured motorist endorsement, it is a viola-

tion of the prohibition contained in the Pennsylvania Con-

stitution against impairment of obligations of contract

and a denial of due process of law guaranteed by the Four-

teenth Amendment of the United States Constitution for a

lower court to ignore those decisions or to undertake a re-

interpretation of the statute as it applies to this class of

cases even if such a court if it had the statute before it in

an original action would be free to do so. The above

references to constitutional provisions are: Pennsylva-

nia Constitution of 1874, P.S. Const., Art. 3, See. 17, and

United States Constitution, U.S.C.A. Amend. XIV, See. 1.

4)

Statement of the Case

H. A Party to an Arbitration Must Have Access to the

Courts at Some Stage. If He Cannot Challenge Jurisdic-

tion at the Beginning or During the Process, He Must

Under Due Process Concepts Be Able To Make His

Challenge at the End or When the Award Is Filed

In addition to the constitutional argument set out in

part G above another element of basic unfairness that de-

nies to the appellant and likewise to other claimants and

respondents to demands for arbitrations under the unin-

sured motorist endorsement of the standard automobile

liability policy issued in the Commonwealth of Pennsyl-

vania arises out of the apparent conflict between the Har-

leysville vs. Adair and the Owens vs. Concord Mutual

cases, supra (both cases cited above).

Assuming that Owens vs. Concord Mutual, supra,

stands for the proposition that uninsured motorist arbi-

trations are common law proceedings for the sake of dis-

cussion, we have the anomalous situation wherein a party

to an uninsured motorist arbitration proceeding in the

Accident Claims Tribunal of the American Arbitration

Association would be left without any judicial remedy for

any irregularity in the form or substance of such an arbi-

tration. When the arbitration clause of the policy was

written it was never intended by the use of the term ‘‘bind-

ing’’ to abrogate and cast aside all judicial remedy. In

what manner shall the company raise the issue of the ju-

risdiction of the arbitrator who abrogates to himself the

rignt to make policy coverage determinations well beyond

the scope of the matters submitted to him by the arbitra-

tion agreement? If Harleysville vs. Adair (supra) is fol-

SRAM Asan ait Nile Son aS aM haA REELS oe HI Cyt BABI ee SE at AA BR a Rk I tar a oe I

42 |

Statement of the Case

lowed, the company has no right to a declaratory judgment

action and no right to seek the aid of vhe injunctive powers

of the equity court during the arbitration. And under

Owens vs. Concord Mutual, supra, the company has no

right to seek a review of the award except for fraud and

collusion. The company, and a similar thing could hap-

pen to a claimant, would be lashed tight to the dock with

a legal ‘‘clove hitch.’’

This is an intolerable state of affairs. It is funda-

mentally unfair and a denial of the right to procedural

due process of law guaranteed tz every person, corporate

or individual, by virtue of the Fourteenth Amendment of

the United States Constitution, U.S.C.A. Const. Amend.

XIV, See. 1.

This constitutional issue has, itself, been recognized

to exist in arbitration situations by the Pennsylvania Su-

preme Court. In Goldstein et al. vs. International Ladies’

Garment Workers’ Union, 328 Pa. 385, 196 A. 43 (1937),

at page 392, w..cre a claim was made by one party to an

arbitration under a written arbitration agreement that a

particular issue as to jurisdiction of the arbitrator and his

right to decide a particular issue under the submittal agree-

ment the court pointed out that the party did not only

have a right to have that issue (which contract was bind-

ing) determined by a judicial tribunal but that the party

had a constitutional right to have that issue so decided.

The court quoted with approval Chief J udge Cardozo then

sitting on the New York Court of Appeals and mentioned

him by name:

“*. .. ‘Arbitration presupposes the existence of a

contract to arbitrate. If a party to a controversy

43

Statement of the Case

denies the existence of the contract and with it the ju-

risdiction of the irregular tribunal, the regular courts

of justice must be open to him at some stage for a de-

termination of the issue. The right to such a deter-

mination, either at the beginning or at the end of the

arbitration or in resistance to an attempted enforce-

ment of the award, is assured by the Constitution as

part of its assurance of due process of law.’’’ (Em-

phasis supplied.) (Finsilver, Still & Moss, Inc. vs.

Goldberg, Maas & Co., Inc., 253 N.Y. 382, 171 N.E. 579

(1930) at page 389.)

New York State amended its Arbitration Act in 1937

to meet the situation described in the Finsilver case (quoted

and cited above) by integrating its civil practice act into

its arbitration procedure to thereby allow a party to pre-

liminarily challenge jurisdiction or to participate and waive

it. See Matter of Harris (E. India Trading Company),

16 Misc. 2d 87, 144 S. 2d 894 (1955) at page 89.

The principle developed in the quotation from the

Fimsilver case set out above by Mr. Justice Cardozo is

still fundamentally sound today. There must be access to

the judicial system at some point. in Harleysville vs.

Adair, supra, the Pennsylvania Supreme Court refused to

allow interlocutory intervention into uninsured motorist

arbitration proceedings. It did state that the contestants

have a right under the Arbitration Act of 1927 to file a

petition under sections 169 and 170 of that act to the Court

to vacate, mcdify or correct an uninsured motorist arbi-

tration award. The right to file such a petition is a statu-

tory right. No such right existed or exists under common

law.

44

Statement of the Case

I. The Conduct of Arbitrations Under the Uninsured Mo-

torist Endorsement in the American Arbitration Associa-

tion Presumes as Part of the Basic Procedure That the

Pennsylvania Arbitration Act Applies to This Type of

Arbitration

The Courts of Common Pleas have readily entertained

petitions to them made under the Pennsylvania Act of

1927, See. 166 (Act of April 15, 1927, P. L. 381, 5 P.S. See.

166), for leave to issue subpoenas to compel the attend-

ance of uninsured motorists and other witnesses at arbi-

tration hearings. See unreported Court of Common Pleas

of Philadelphia County, Pennsylvania cases: In re Arbi-

tration between Israel Markovitz and Joseph C. Hutchin-

son, Claimant and St. Paul Mercury Insurance Company,

Court of Common Pleas of Philadelphia County No. 4,

December Term, 1966, Number 1107 where leave to issue a

subpoena was requested. Hon. Peter Hagan, Pres. Judge,

allowed the Rule; Hon. Edward J. Griffiths, after a hear-

ing granted the Rule; and Hon. Joseph E. Gold, Pres.

Judge, granted a motion for sanctions and an attachment

on a recalcitrant witness who refused to honor a subpoena

to attend and give testimony at an uninsured motorist ar-

bitration before an arbitrator in the American Arbitra-

tion Association. And William Trost, Jr., a minor by his

Father and Natural Guardian, William J. Trost vs. Har-

leysville Mutual Insurance Company, Court of Common

Pleas of Philadelphia, November Term, 1967, No. 54, where

Hon. Vincent A. Carroll, Pres. Judge, and Administra-

tive Judge, and Hon. Charles A. Waters both granted pe-

titions under the Pennsylvania Arbitration Act, same sec-

tion as cited above, for a party to an arbitration to issue

45

Statement of the Case

subpoenas to compel the attendance of both the uninsured

motorist and eyewitnesses to an accident from which the

claim being arbitrated arose.

Your petitioner knows of no application to any court

in the Commonwealth of Pennsylvania for assistance or

aid under the Pennsylvania Arbitration Act in uninsured

motorist arbitrations in the American Arbitration Associ-

ation that were not entertained. In the two cases above

cited, the applications were opposed but the courts enter-

tained them anyway.

In the Accident Claims Tribunal of the American

Arbitration Association, the arbitrators who sit as arbi-

trators in uninsured motorist cases routinely issue sub-

poenaes which not only purport to be issued by virtue of

the judicial power of the state but indicate that the arbi-

trator who is issuing the subpoena is acting under the

Arbitration Law of the state. Books and records are

sought by a similar subpoena using the familiar term of

Pennsylvania Law, duces tecum.

The uninsured motorist arbitrations are conducted

formally, court reporters are frequently present, all wit-

nesses are sworn to the usual judicial oath before they are

examined and all witnesses are cross-examined by counsel

subject to the usual objections which the rules of evidence

dictate. Frequent and extensive legal openings, summa-

tions and closings are made to the arbitrators. Briefs

are prepared in regard to the law of the case. These hear-

ings are not informal gatherings in the back room of an in-

surance company somewhere, to try to reach some mutual

understanding. They have all the air of an adversary

proceeding. The claimant counsel enters the forum with

46

Statement of the Case

an intent to maximize his client’s recovery and he makes

use of all the forensic techniques available to him in a

court of law. All the elements of damage common to a

negligence lawsuit including the nebulous concept of ‘‘ pain

and suffering’’ are provable at these hearings and are con-

sidered as being matters upon which the arbitrator can

base his award. If implied intent to invoke the Pennsyl-

vania Arbitration Act is as the court says it is in J. A.

Robbins, Inc. vs. Airportels, Inc. (cited above), a criterion

to determine whether an arbitration is under the Arbitra-

tion Act such intent can certainly be found in even a rou-

tine examination of the proceedings surrounding this im-

portant and growing class of arbitration. It would seem

from such an examination that the only time that any as-

sumption arises that the uninsured motorist arbitrations

are not under the Arbitration Act is when the award is

filed.

Then the claimant and his counsel and the courts bend

over backwards to find ways to refuse review. This leads

to a game of legal ‘‘musical chairs’’ and often as in the

instant case to a serious deprivation of the respondent

company’s right to fair treatment in the courts and to due

process of law.

In the opinion of the Superior Court of Pennsylvania

(Appendix B, p. 54), the court cites Keller vs. Local 249,

423 Pa. 353, 223 A. 2d 724 (1966), as a holding occurring

after the rendition of the Harleysville vs. Adair, supra,

decision, which it considers as dispositive of the argument

that in Harleysville vs. Adair, supra, the Supreme Court

of Pennsylvania granted a right to procedural relief under

the Pennsylvania Arbitration Act of 1927. Yet, a reading

of that decision reveals that it stands ‘‘four square’’ on

47

Statement of the Case

the Supreme Court of Pennsylvania’s holding in J. A.

Robbins, Inc. vs. Airportels, 418 Pa. 257, 210 A. 2d 896

(1965), and in no way alters the rule that parties to an

arbitration agieement can ‘‘impliedly’’ incorporate the

provisions of the Pennsylvania Arbitration Act of 1927

announced in the J. A. Robbins, Inc. »°. Airportels case,

supra.

And lastly, in the opinion of the Superior Court of

Pennsylvania (Appendix B, p. 54), the court cites Nation-

al Grange Mutual Ins. Co. vs. Kuhn, 428 Pa. 179, 236 A.

2d 758 (1968), as a holding which it considers as disposi-

tive of your petitioner’s argument for relief. Yet a read-

ing of that decision reveals that it stands solely for the

proposition that the arbitrator acting under the standard

arbitration clause of the uninsured motorist endorsement

has power to decide coverage problems in addition to de-

termining liability and damages.

Nowhere is there any case law in the Commonwealth

of Pennsylvania which is contra to the arguments ad-

vanced by your petitioner in support of the procedural

relief it sought from the courts of that state in the instant

case. Yet relief has been denied. Your petitioner sub-

mits that this is a classical example of a denial of due

process of law.

In its petition for leave to appeal to the Supreme

Court of Pennsylvania (a copy of which is contained in the

official transcript of the record of the Supreme Court of

Pennsylvania which has been filed in this case) on page 6

et seq., your petitioner pointed out to the Supreme Court

of Pennsylvania that the rule that it has announced as

governing the application of the Pennsylvania Arbitration

48

Statement of the Case

Act of 1927 in the J. A. Robbins Co., luc. vs. Airportels,

Inc., 418 Pa. 257, 210 A. 2d 896 (1965), and which it has

repeatedly reiterated, requires a factual determination of

whether or not the Pennsylvania Arbitration Act of 1927 .

has or has not been impliedly incorporated into a specific

arbitration agreement; and that in regard to such factual

determinations, a party is entitled to a jury trial. To al-

low a court merely to dispose of a case by saying it doesn’t

think the parties impliedly incorporated the Pennsylvania

Arbitration Act of 1927 is to accord to such a court the

power to determine facts that is completely foreign to

Anglo-American jurisprudence. The travesty of such a

proceeding is even more apparent as in the instant case

where your petitioner presented extensive information.

The Court’s attention is called to Point Three for Appeal

and Point Four for Appeal contained on pages 5 and 6

of your petitioner’s petition addressed to the Supreme

Court of Pennsylvania requesting leave to appeal to that

court, which petition is contained in the transcript of the

record of the Supreme Court of Pennsylvania which has

been filed in this case, in which the nature of the uninsured

motorist arbitrations and the procedures followed in these

arbitrations is set out in extenso.

As your petitioner has argued throughout this peti-

tion, the doctrines of law and the jurisprudence of the

very Court from which it sought relief, the Supreme Court

of Pennsylvania, supports its contentions. Yet, that court

has refused to apply its own doctrines to the case as have

the lower courts subject to its jurisdiction. Such a denial

is a fundamental denial of due process of law guaranteed

by the Fourteenth Amendment of the United States Con-

stitution.

49

Reason for Granting the Writ

CONCLUSION AND REASON FOR GRANTING

THE WRIT

Your petitioner has been denied due process of law and

has been deprived of valuable contract rights by decisions

of the lower courts of the Commonwealth of Pennsylva-

nia and has been denied a hearing requested on constitu-

tional grounds by the Supreme Court of Pennsylvania.

The matter concerns not only its own policies numbering

in the hundreds of thousands but all automobile liability

policies issued in Pennsylvania by any insurance company

doing business there. We respectfully request that a writ

of certiorari issue to the Supreme Court of Pennsylvania

and to the Superior Court of Pennsylvania granting a re-

view of these State Court proceedings in this matter.

Pavut A. Lockkey, Esquire,

Pauu A. Lockrey,

Counsel for Harleysville Mutual

Insurance Company, Petitioner.

Appendix A—Opinion Filed Oct. 11, 1967

APPENDIX.

APPENDIX A

COURT OF COMMON PLEAS

PHILADELPHIA COUNTY

No. 3610 March Term, 1967

Oscar Johnson

vs.

Harleysville Mutual Casualty Company

Catherine G. Barone, Esqa., for Plaintiff.

Paul A. Lockrey, Esq., for Defendant.

OPINION

Waters, J., October 11, 1967.

Plaintiff, after an award in his favor under the unin-

sured motorist coverage clause in his insurance policy,

entered judgment against the defendant insurance com-

pany in the amount of $6,500, representing the amount of

51

Appendix A—Opinion Filed Oct. 11, 1967

the award, $6,450, plus $59 administrative fee paid by him

to the American Arbitration Association. Defendant filed

a petition to open the judgment, alleging that the order

for judgment was improper and contrary to law because

it had been entered without petition to the court and de-

prived the defendant of a statutory rigut to seek review

of the award. The rule to show cause issued pursuant to

this petition having been discharged, defendant has ap-

pealed to the Superior Court.

The issue posed by the pleadings is whether the arbi-

tration here involved was under the common law or pur-

suant to the Arbitration Act of April 25, 1927, P. L. 381,

D P.S. 161 et seq. The act of 1927 did not displace arbi-

tration under the common law: Freeman v. Ajax Found-

ry Products, Inc., 398 Pa. 457 (1960) ; and ‘‘when the agree-

ment to arbitrate does not itself determine whether the

Act of 1927 or common law rules are controlling . . . and

when there is no evidence that both parties subseauently

agreed, either expressly or by implication, to apply the

Act, common law rules must control the enforcement of

the award’’: John A. Robbins Company, Ine. v. Air-

portels, Inc., 418 Pa. 257, 262 (1965), as quoted in Keller

v. Local 249, 423 Pa. 353, 355 (1966). ‘Likewise, common

law rules must control the scope of review of the award.

Wingate Construction Company v. Schweizer Dipple, Inc.

[419 Pa. 74 (1965)]’’; Keller v. Local 249, supra, p. 355.

We concluded that this was arbitration under the common

law, not only because of the absence of any agreement to

the contrary, but because of the express language con-

tained in the policy: ‘‘. . . the matter or matters upon

which such person and the company do not agree shall be

‘settled by arbitration in accordance with the rules of the

COR NS 65 Be a es 2

52

Appendix A—Opinion Filed Oct. 11, 1967

American Arbitration Association, and judgment up7n the

award rendered by the arbitrators may be entered in any

court having jurisdiction thereof. Such person and the

company each agree to consider itself bound and to be

bound by any award made by the arbitrators pursuant to

this Part.’’

This clearly indicated common law arbitration, and

authorized entry of judgment in favor of the prevailing

party. The defendant could have filed a petition to va-

cate the award on the ground of ‘‘fraud, misconduct, cor-

ruption or oiher such irregularity which caused the arbi-

trator to render an unjust, inequitable and unconscionable

award”’ (cf. Keller v. Loca! 249, supra), but it did not do

so. The arbitration award was made on March 17, 1967,

and judgment was entered April 20, 1967, more than a

month later. Thereafter defendant filed its petition to

open the judgment, expressly for the purpose of being

permitted to file a motion to set aside, vacate, modify or

correct the award pursuant to the Arbitration Act of 1927.

Since we were convinced, as stated above, that this was

common law arbitration, not subject to the provisions of

the statute, we discharged the rule to open the judgment.

Our attention was directed to Harleysville Mutual

Casualty Co. v. Adair, 421 Pa. 141 (1966), but we do not

feel that that case is dispositive of the issue whether the

contract therein called for common law or statutory arbi-

tration. That case held merely that the court of common

pleas had. properly dismissed a complaint in equity seek-

ing an injunction to restrain arbitration proceedings until

after the completion of the company’s pretrial discovery.

The question whether the arbitration was common law or

under the statute was not raised or decided, though there

53

Appendix A—Opinion Filed Oct. 11, 1967

is dictum in the final paragraph (p. 146) to the effect

that the Act of 1927 provides a method of statutory relief.

On the other hand, the question before us for decision in

the instant case appears to have been decided definitely in

Owens v. Concord Mutual Insurance Co., 210 Pa. Superior

Ct. 235 (1967), in which the court held that where the

parties do not agree to apply the Act of 1927 to arbitra-

tion proceedings, common law rules control the enforce-

ment of the award and the scope of review. ;

Waters,

J.

satin eB Mar | . ro

Wie wet nN lea a AE Beton SaaS: |

Appendix B—Opinion Filed Mar. 20, 1968

APPENDIX B

IN THE SUPERIOR COURT OF PENNSYLVANIA

Philadelphia District

No. 899 October Term, 1967

Oscar Johnson

Vs.

Harleysville Mutuai Casualty Company,

Appellant

Appeal from the Order of the Court of Common Pleas of

Philadelphia County at No. 3610 March Term, 1967

OPINION

By Jacobs, J.

Filed: March 20, 1968

This is a companion case to Smith v. Safeguard Mut.

Ins. Co., Pa. Superior Ct. , A. 2d (1968),

in which an opinion was filed today. Appellee claimed

damages under the uninsured motorist provision of a poli-

cy issued by appellant. The dispute was submitted to ar-

a

PTB a tll! ale lel 6G lak ce ina nS a ll laa

55

Appendix B—Opinion Filed Mar. 20, 1968

bitration pursuant to the same arbitration clause recited

in full in the Smith case." An Award was made by the

arbitrator for the appellee who caused judgment to be

entered on the award in substantially the same manner it

was done in the Smith case. However, instead of moving

to strike the judgment as was done in the Smith case, here

the appellant moved to open the judgment in order that it

might attack the award pursuant to the provisions of the

Arbitration Act of April 25, 1927, P. L. 381, 5 P.S. §161

et seq. The court below dismissed the motion holding that

this was common-law arbitration not arbitration under the

Act of 1927. We agree.

The sole issue raised on this appeal is whether the

instant arbitration is subject to the provisions of the Ar-

bitration Act of 1927. We have already answered this ques-

tion in the negative in the Smith case and need not repeat

what we said there. However, appellant directs our at-

tention to the concluding paragraph of Harleysville Mut.

Cas. Co. v. Adair, 421 Pa. 141, 218 A. 2d 791 (1966), which

says, ‘‘Finally, the Arbitration Act of 1927, supra, §$§7

and 10, 5 P.S. §§167, 170, provide a complete method of

statutory relief by appeal to the court to vacate, modify

or correct an award where the arbitrators exceed their

powers or refuse to hear evidence or by misbehavior preju-

dice the rights of a party.’’ Id. at 146, 218 A. 2d at 794.

Since Adair apparently involved the same arbitration pro-

vision here considered, this language would seem to sup-

port the argument that judgment may not be entered

until a court approves the award pursuant to §§167 and

170 of the Arbitration Act. For several reasons we do

? Except that this policy refers to the clause as a ‘‘part’’

rather than an ‘‘endorsement’’,

hes Rt ENS elt es

Faience ds dates tad

Ae ee ie ee ee a See ee a eee Se a eve v

56

Appendix B—Opinion Filed Mar. 20, 1968

not feel compelled to accept that conclusion. First, the

quoted paragraph was incidental to the holding of Adair

(that equity will not enjoin an arbitration, which has com-

menced under American Arbitration Association rules, to

permit a party to exercise the pretrial discovery rules¢of

civil procedure). Second, the Supreme Court has, since

the Adair decision, expressly reaffirmed the general rule

that the common law controls the agreement and award

when the parties, as here, do not agree expressly or im-

pliedly that the Act of 1927 shall apply. Keller v. Local

249, 423 Pa. 353, 223 A. 2d 724 (1966). Third, the Supreme

Court apparently agrees in National Grange Mut. Ins. Co.

v. Kuhn, Pa. , A. 2d (1968), thet the

same arbitration provision as here considered is subject to

common law rules of review.

We thus conclude that the lower court’s dismissal of

the appellant’s motion to open judgment, which is the

only maiter before this court, was correct.

Affirmed.

57

Appendix C—Letter Dated Sept. 25, 1968

APPENDIX C

SUPREME COURT OF PENNSYLVANIA

Kastern District

Philadelphia 19107

September 25, 1968

Paul A. Lockrey, Esq.,

1922 Philadelphia Nat’l. Bank Building

Broad and Chestnut Streets

Philadelphia, Pa. 19107

In re: Oscar Johnson vs. Harleysville Mutual

Casualty Company, Petitioner

No. 150-A Miscellaneous Docket No. 16

(No. 899 October Term, 1967)

Dear Mr. Lockrey:

Please be advised that the Court has entered the fol-

lowing Order on your Petition for Allowance of Appeal

from the Judgment of the Superior Court, in the above

captioned matter:

‘‘September 25, 1968

Denied, Per Curiam,

Jones, J.’’

The printed Record submitted with your Petition is

returned to vou herewith.

Yours very truly,

Patrick N. Bolsinger

Prothonotary

PNB :mb

CC: Catherine G. Barone, Esq.

58

Appendix D—Constitutional Provisions Relied U pon

APPENDIX D

CONSTITUTIONAL PROVISIONS RELIED UPON

ee

UNITED STATES CONSTITUTION

Amendment XITV—Citizenship; privileges and immun-

ities; due process; equal protection; apportionment of

representation; disqualification of officers; public debt;

enforcement.

Section :—All persons born or naturalized in the

United States, and subject to the jurisdiction thereof, are

citizens of the United States and of the State wherein they

reside. No State shall make or enforce any law which

shall abridge the privileges or immunities of citizens of

the United States; nor shall any state deprive any person

0: life, Loerty or property without due process of law; nor

deny to any person within its jurisdiction the equal pro-

tection of the law.

U.S.C. Constitution, Amend. XIV, Sec. 1

CONSTITUTION OF PENNSYLVANIA

Article 1, Section 17—Ex post facto laws, impairment

of contracts.

No ex post facto law, nor any law impairing the obli-

gation of contract, or making irrevocable any grant of

special privilege or immunities, shall be passed.

Purdon’s Penna. Statutes Annotated Const. Ar-

ticle 1, Section 17.

59

Appendix E—Letier Dated Nov. 1, 1968

APPENDIX E

SUPERIOR COURT OF PENNSYLVANIA

Philadelphia District

Philadelphia, Pa. 19107

~ November 1, 1968.

Paul A. Lockrey, Esq.,

1922 Phila. National Bank Bldg.,

Philadelphia, Penna., 19107.

Re: Oscar Johnson v. Harleysville Mutual Cas-

ualty Company, Appellant

No. 899 October Term, 1967

Dear Mr. Lockrey:

The Court has entered the following Order on Appel-

lant’s Petition for Supersedeas in Order to File Petition

for Writ of Certiorari with the Supreme Court of the

United States, filed in the above entitled appeal:

‘‘And Now, to wit, this 1st day of November, 1968,

upon consideration of the within Petition of Appel-

lant for Supersedeas in Order to File Petition for

Writ of Certiorari with the Supreme Court of the

United States, and Answer thereto, at appeal No. 899

October Term, 1967, it is ordered that the prayer of

said petition be, and the same is hereby denied.

Per Curiam.’’

Very truly yours,

George W. Dunn, Jr.

Deputy Prothonotary

CAH:RWH ee a 7

cc: Catherine Gallagher Barone, Esq.

Appendix F—Letter Dated Nov. 14, 1968

APPENDIX F

OFFICE OF THE CLERK

SUPREME COURT OF THE UNITED STATES

WASHINGTON, D. C. 20543

November 14, 1968

Paul A. Lockrey, Esquire

1922 Philadelphia National Bank Building

Broad & Chestnut Streets

Philadelphia, Pennsylvania 19107

Re: Harleysville Mutual Casualty Co. v. Johnson,

O. T. 1968

Dear Sir:

Your application for stay in the above-entitled czse,

together with the appellee’s opposition thereto, was pre-

sented to Mr. Justice Brennan who on November 13th

denied the apylication.

Very truly yours,

John F. Davis,

Clerk

By E. P. Cullinan

E. P. Cullinan

Chief Deputy

EPC :lsr

cc: Miss Catherine G. Barone

Attorney at Law

1115 Fort Wash. Avenue

Fort Washington, Pa.