Background
On June 29, 1789, Zephaniah Turner of Charles County, Maryland, wrote to President George Washington and observed:
Our Laws are too Numerous. Is it not possible that an alteration might take place for the benefit of the public?…Could it not be possible to curtail the Number of Lawyers in the different States? Suppose each State was to have but Two Lawyers to be paid liberally…[and] where a real dispute subsisted between Plaintiff and Defendant a reference [to arbitration] should be proposed, and arbitrators [be] indifferently chosen by both parties…whose determination shall be final.Footnote 1
Arbitration had been in use in Maryland since at least the early 1600s, as was true in a number of the original colonies. However, centuries later, a notion developed that the courts in the United States had always been jealous of the arbitration process and that they consistently refused to grant enforcement of arbitration agreements. In Gilmer v. Interstate/Johnson Lane Corp.,Footnote 2 Mr. Justice White wrote that the purpose of the Federal Arbitration Act (FAA), first passed in 1925 and reenacted in 1947, “was to reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements upon the same footing as other contracts.” The point was explained more fully in the 1924 House Report on the bill that became the FAA:
The need for the law arises from an anachronism of our American law. Some centuries ago, because of the jealousy of the English courts for their own jurisdiction, they refused to enforce specific agreements to arbitrate upon the grounds that the courts were thereby ousted from their jurisdiction. This jealousy survived for so long a period that the principle became firmly embedded in the English common law and was adopted with it by the American courts. The courts have felt that the precedent was too strongly fixed to be overturned without legislative enactment.Footnote 3
A good illustration of the attitude of the American courts is the opinion by Justice Story in Tobey v. Bristol.Footnote 4 The ultimate holding in the case was narrow,Footnote 5 but in a rambling opinion issued only months before his death in September 1845, Justice Story assessed whether an agreement to arbitrate could be specifically enforced in court. He said that, “no case has been cited by counsel, or has fallen within the scope of my researches, in which an agreement to refer a claim to arbitration, has ever been specifically enforced in equity,” adding that, “So far as the authorities go, they are altogether the other way.”Footnote 6 All of the authorities cited by Justice Story were English cases, including Wellington v. Mackintosh Footnote 7 and Kill v. Hollister.Footnote 8 Those two cases came to stand for the principle that private parties could not, by agreeing to arbitrate, oust the courts of jurisdiction. In part because of inaccurate reporting, Wellington and Kill had been misinterpreted;Footnote 9 nonetheless, as stated in the 1924 House Report (quoted above), the “no-ousting” principle became embedded in English law and then traveled to America.Footnote 10
Justice Story acknowledged the then-modern view favoring arbitration, especially in commercial nations, but he said that whenever arbitration was made compulsive, it was pursuant to legislation that equipped arbitrators with all powers necessary for effective decision making, but with the safeguard that arbitration decisions could be appealed to the courts. He thought that the limited experience in America with compulsive arbitration had been lackluster at best, and, “At all events, it cannot be correctly said, that public policy, in our age, generally favors or encourages arbitrations, which are to be final and conclusive, to an extent beyond that which belongs to the ordinary operations of the common law.”Footnote 11
We will demonstrate that Justice Story's description of the status of arbitration in America in his time was simply wrong. First, however, let us fast-forward to see how arbitration in America fared during the twentieth century, continuing to the present.
In the famous Lincoln Mills case,Footnote 12 Mr. Justice Douglas spoke for the Court in championing the arbitration process in the context of collective bargaining agreements governed by the National Labor Relations Act, which the Court declared enforceable in federal district court by virtue of §301 of the Taft-Hartley amendments of 1947. Three years later in the Steelworkers Trilogy,Footnote 13 the Court reaffirmed and reinforced its endorsement of arbitration of labor disputes. These cases afforded protection to unionized employees, which was thought important because of the supposed inapplicability of the Federal Arbitration Act. That Act contains a provision that exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”Footnote 14 The lower federal courts for some time struggled with the meaning of this exemption, but not until 2001 did the Supreme Court face the question. In Circuit City Stores, Inc. v. Saint Clair Adams,Footnote 15 the Court concluded that the provision, taken in the context of the circumstances surrounding its enactment, “exempts from the FAA only contracts of employment of transportation workers.”Footnote 16 The Court divided five to four, and Justice Kennedy, writing for the majority, repeated the observation that “the FAA was a response to hostility of American courts to the enforcement of arbitration agreements, a judicial disposition inherited from then-longstanding English practice.”Footnote 17
In Circuit City, as a condition of getting his job, an employee was required to sign an arbitration provision agreeing to settle by arbitration any dispute whatsoever relating to his employment, including claims that might arise under Title VII of the Civil Rights Act of 1964. Such sweeping “take-it-or-leave-it” arbitration provisions can be attacked as unconscionable as a matter of state contract law,Footnote 18 but for present purposes, this background is to illustrate the consistent endorsement of arbitration by the Supreme Court ever since Lincoln Mills,Footnote 19 in contrast to the supposed jealousy of the arbitration process in early American courts.
Arbitration in the Colonies and Early Republic
A representative case from the late eighteenth century is Borretts v. Patterson,Footnote 20 a 1799 North Carolina action of debt on an arbitration bond. The defendant was a factor who, for a commission, received and offered for sale the merchant-plaintiffs' goods, and a dispute arose over accounts claimed by plaintiffs to be owing. The parties submitted the dispute to arbitration, and the arbitration bond recited the defendant's agreement to be bound by the decision of named arbitrators, otherwise to forfeit the amount of the bond. The named arbitrators determined that defendant owed plaintiffs more than £400, but amounts owing to Patterson from buyers of the goods were to be deducted, provided Patterson had used due diligence in trying to collect from the buyers. Patterson refused to honor the award, and defended in court by arguing that the award was too indefinite and open-ended to be enforced. The court rejected Patterson's argument, declaring that rigorous application of rules of construction of arbitration awards or the use of “endless subtlety of refinement would be, in truth, to render awards of no use, in the main purpose of their introduction–re-adjusting the controversies of men, before a domestic tribunal, unattended with expense, trouble or delay.”Footnote 21
Economy, informality, and speed have always been the chief hallmarks of the arbitration process, and that process was in place long before the North Carolina court's pronouncement in Borretts. The most extensive and accurate description of arbitration practices in colonial America is Bruce Mann's study of arbitration and community in pre-revolutionary Connecticut.Footnote 22 Mann states that seventeenth century arbitration in Connecticut was informal, neighborly, “a community affair.”Footnote 23 He correlates changes in the arbitration process with changes in the character of community in the colony. As communities grew and became settled by land speculators, dispute settlement became less informal. This process accelerated in the second half of the eighteenth century, after arbitration was made the subject of legislation.Footnote 24
The use of arbitration in seventeenth-century America was not unique to Connecticut. Other studies have pointed to early experience in other colonies, such as Eben Moglen's examination of practices in New York.Footnote 25 Of necessity, studies such as these are shaped by available records, and available arbitration records usually relate, in one way or another, to the courthouse. How extensive the practice of arbitration was among private citizens with no involvement of lawyers or the courts we will probably never know, as the only records of such practices will be happenstance. There are, nevertheless, good reasons to suppose that “private” arbitration had a widespread usage: reasons such as the heritage of the law merchant, familiarity of men of business with the process, and the use of arbitration by the Dutch in New York and by Quakers in Pennsylvania and New Jersey. As early as 1648, English barrister John March claimed that “Compromises or Arbitrements were never more in full use than now,” and that “most men either have been or may be Arbitrators; or at least have done, or may submit themselves to the Arbitration of others.”Footnote 26
Whatever its “private” history, arbitration was a regular part of the customs of colonial courts. The seventeenth century custom took the form of what was called a “reference”: the consensual removal of pending litigation from the court docket and the referral of the dispute to arbitration. This practice emerged in both England and the American colonies in the mid-1600s. In the discussion to follow, we augment Bruce Mann's exposition of the Connecticut experience with specifics from early legislation and archival records of Pennsylvania and Maryland. In addition, we refer to early American statutes that authorized or endorsed the procedure by which arbitration submissions were made rules of court. The latter requires an understanding of a 1698 English statute drafted by John Locke.
The John Locke Statute: Submissions Imitating References
In England in 1698, Parliament enacted an arbitration statute that had been drafted by John Locke.Footnote 27 In drafting the statute, Locke was executing an assignment for the Board of Trade, of which he was a member. He clearly was seeking a formula that would encourage private dispute settlement between merchants without legal entanglement. Locke was not an admirer of the legal profession. In his journal for 1674, he listed among those who hindered trade, “Multitudes of lawyers.”Footnote 28
The formula produced by Locke, which became the 1698 statute, was ingenious. The foundation upon which it stood was the well-understood practice of consensual referrals of litigated cases to arbitration. Referrals, or “references,” as they were called, had an important advantage that private arbitration lacked. When a reference was agreed to, the agreement was made a rule, that is, an order, of court. This made the arbitration agreement, and often the award as well, enforceable through the contempt power.Footnote 29
What John Locke did was to contrive a way for private parties wishing to arbitrate to have the advantage of the contempt power without having to commence active litigation. The trick was to allow the parties to pretend to litigate; to “paper” their arbitration as if it were an active lawsuit by going to the clerk's office and paying a fee in order to have the submission agreement entered in the rule book. No pleadings or other litigation records were required. The simple entry in the rule book made the contempt power available, and this is what the 1698 statute explicitly allowed. Over the course of the eighteenth century, submissions to arbitration under this statutory authority became commonplace, increasing in number as the century progressed.Footnote 30 By the 1790s, the Locke statute had become so well known that it turned up in satirical verse about lawyers. In the Pleader's Guide, the description of a country attorney—a “worthy little friend” named Joe Ferrett—includes the following:
What was the experience in America with the 1698 statute? No one has systematically examined the extent of American adoptions of the statute or private agreements taking advantage of it. The first of these—legislative adoptions—can be located in printed sources,Footnote 32 but most contractual applications can be found only in manuscript sources, if at all. As to the statutes, some understanding is needed of how, or the extent to which, English statutes became law in the colonies and states. In this description, we rely almost entirely on the excellent work by Elizabeth Gaspar Brown, British Statutes in American Law. Footnote 33
The extent to which inhabitants of the British colonies in North America carried with them the common and statutory laws of England was hotly debated in the years of American colonization. As British subjects, most American colonists believed they were entitled to invoke all English statutes and common law, and considered this an important right of their citizenship. The English, however, did not agree.
Each American colony was launched with a charter from the “King in Parliament.” The charters gave settlers the right to enact laws, as long as they were not contrary to the laws of England. The charters also reserved the right of the King to legislate for the colonies. Typically, they contained a declaration that the colonists were not to be deprived of their “liberties and immunities” as English subjects.Footnote 34
Despite this language, it was not the Crown's intention literally to transplant intact the laws of England to the American colonies. Rather, the English view was that the details of which laws applied in America would be worked out on a case-by-case basis, as different fact patterns arose.Footnote 35 This position was based on the theory that whether colonists carried English laws with them depended upon whether the settled lands were inhabited or uninhabited, and whether they were made by English conquest or cession. If the land was uninhabited, the colonists took with them “all laws in force in England.” If it was inhabited, the colonists did not directly carry the laws with them, but the King had the power to declare which laws would be in force.Footnote 36 England considered that the American colonies were inhabited and were taken by conquest or treaty; therefore, the colonists did not take the laws with them automatically.Footnote 37
The English view was that statutes enacted by Parliament after the date of a colony's settlement by conquest could be considered in force there in two different ways. First, if an act of Parliament was specifically extended to one or more colonies, it was in force there. Second, an act of Parliament could be “received” in the colony by an act of the colonial legislature, or by long-accepted usage or practice of colonial courts.Footnote 38 Blackstone in the first volume of his Commentaries, published in 1765, explained the English position as follows:
Our American plantations are principally of this latter sort [conquered or ceded countries], being obtained in the last century either by right of conquest and driving out the natives…or by treaties. And therefore the common law of England, as such, has no allowance or authority there; they being no part of the mother country, but distinct (though dependent) dominions. They are subject however to the control of the parliament; though (like Ireland, Man, and the rest) not bound by any acts of parliament, unless particularly named.Footnote 39
American colonists disagreed with the notion that the colonists did not automatically carry English statutory and common law with them. Their position was that the American lands were uninhabited when the colonists arrived, as they were really the first settlers after the Indians vacated. The only exceptions were New York and New Jersey, which had been ceded by the Dutch.Footnote 40 In Virginia, the sentiment was that the settlers had driven away a savage, lawless people and inhabited unsettled land; therefore, Virginia authorities believed that they brought the common law of England with them when the colony was first settled in 1607. English cases decided after 1607 were considered binding, not persuasive, authority in Virginia's courts.Footnote 41
The colonists employed three major challenges to the English position. First, they argued that language in the colonies' charters about being “agreeable to the laws of England” constituted a grant of the laws of England. Second, they argued that the charters' grants of the “rights and privileges” of Englishmen were grants of the laws. And third, colonial legislatures attempted to incorporate large numbers of British statutes into their own laws by reference, although the Crown often disallowed such measures.Footnote 42 It was also accepted that some English statues took root in the colonies through “uninterrupted usage and practice.”Footnote 43
England's arbitration statute of 1698 had two main provisions: 1) allowing out-of-court agreements to arbitrate to be made rules of court by a process of submission by the affidavit of either party in “any of his Majesty's Courts of Record”; 2) establishing that a defaulting party to any arbitration agreement entered as a rule of court shall be subject to the penalties of contempt of court.Footnote 44 The statute did not include an express provision stating that it applied to the colonies. Therefore, its status in each American colony would have depended upon whether it had been “received” by the colony through a declaration of the legislature, or through usage and practice.
We have attempted to identify all of the statutory adoptions. There are at least twenty-two, some from the colonial era, some after statehood, and some from the territories.Footnote 45 All of these contain the basic formula that permitted an arbitration agreement to be entered in court rule books as if an actual lawsuit had been filed, and to be given the same effect as any other court order. Some are direct copies of the Locke statute, and in some jurisdictions other than the twenty-two with statutory adoptions, there is evidence that the 1698 statute was tacitly adopted by usage.Footnote 46
Notes from Pennsylvania
The Pennsylvania legislature adopted in 1806, and expanded in 1808 and subsequently, a full-fledged “Lockeian” scheme for submissions to arbitration that could be made rules of court.Footnote 47 These statutes were essentially a legislative ratification of eighteenth century practice and usage that had been built upon a narrow 1705 enactment.
1705 Defalcation Statute
The pre-1806 experience in Pennsylvania with arbitration was unusual and illuminates how ready the courts were to embrace the arbitration process even without clear statutory authorization. The only pre-nineteenth century statutory treatment of arbitration was a 1705 law entitled, “An Act for defalcation.”Footnote 48 The third section of this statute provided as follows:
That in all cases where the plaintiff and defendant having mutual accounts to produce one against another, shall by themselves or attorneys or agents consent to a rule of court for referring the adjustment thereof to certain persons mutually chosen by them in open court, the award or report of such referees being made according to the submission of the parties and approved of by the court, and entered upon the record or roll, shall have the same effect, and shall be deemed and taken to be as available in law as a verdict given by twelve men, and the party to whom any sum or sums of money are thereby awarded to be paid, shall have judgment or a Scire Facias for the recovery thereof as the case may require, and as is herein before directed concerning sums found and settled by a jury, any law or usage to the contrary of this act in any wise notwithstanding.
Despite the apparent narrowness of this statute and its requirement of approval by the court, James Dallas reported that in Pennsylvania, as of 1790, referees handled “a very great share of the administration of justice.”Footnote 49 This happened by the open encouragement of the courts, with virtually no legislative guidance.
Even though the defalcation statute was not a copy of the English statute, the Pennsylvania Assembly in 1705 clearly borrowed and adapted the Lockean formula, but took only a conservative first step applicable to a narrow category of accounts disputes. Logically by negative inference, we can assume that the Assembly did not intend to extend the Lockean formula to other types of disputes. Nevertheless, Chief Justice M'Kean stated in 1789 in the case of Primer v. Kuhn that, “although the words [of the Defalcation Act] are confined to the case of accounts, yet the construction of the Act has liberally extended the right and benefit of such a reference, to every other cause of action.”Footnote 50 A prominent treatise of the day supported this assertion. The editor of the first American edition of Stuart Kyd's Treatise on the Law of Awards, published in Philadelphia in 1808, prepared detailed notes on Pennsylvania arbitration practice, and after pointing out the limited scope of the 1705 statute, stated, “But the law has been extended by construction not only to every other cause of action, but to cases in which there is no mutuality of demand; so that at this day there is no species of civil controversy known to the law of Pennsylvania for the adjustment of which the parties may not call in aid this act of assembly.”Footnote 51 Later in the treatise, remarking on the validation of agreements reached during court vacations and entered on the books by the prothonotary, the editor observed that the 1705 statute had been “completely twisted . . . from its spirit as well as its letter with a view to extend its benefits to every case.”Footnote 52 Further, he noted that “this species of award has entirely silenced one of its competitors at common law; and among all the printed reports in Pennsylvania, there is not to be found a single reference by rule of court, to which the principles which govern awards made under a rule of Nisi Prius in England, have been applied.”Footnote 53 But the fact that no references are to be found in the printed reports does not mean that they did not happen. As the editor observed elsewhere, “it is a matter of perfect notoriety, and of infinite inconvenience to the bar of Pennsylvania, that they are compelled to grope for the practice of the state courts, among the imperfect and sometimes conflicting recollections of experienced men.”Footnote 54
In Lessee of Dixon v. Morehead, Footnote 55 a dispute over title to real estate had resulted in a jury verdict for plaintiff, despite a prior arbitration award in defendant's favor. In deciding to grant the defendant's motion for a new trial, the president judge of the Westmoreland County Court, Alexander Addison, surveyed the types of arbitration then prevalent in England and compared them to those adopted in Pennsylvania. He identified three types employed in England: two at common law, one by statute. The first common law type was a simple agreement to arbitrate where there was no lawsuit, and in such cases, “the award of the arbitrators binds the parties” and if not obeyed by one party, “the other has his remedy, by an action at law, either on the submission, or on the award.”Footnote 56 The second common law type was the reference after the commencement of a lawsuit, withdrawing the case from the court or jury and making the reference to arbitration a rule of court. The third type was the John Locke 1698 statutory formula permitting a submission to be made a rule of court even though no actual lawsuit existed. Counsel for defendant in Lessee of Dixon argued that the Pennsylvania 1705 defalcation statute “is in imitation of the act of parliament 9 and 10 William 3, and meant the same thing and no more,”Footnote 57 but President Judge Addison disagreed. He said that, “Our act of assembly, in cases of mutual accounts, did not copy this English statute, but introduced into Pennsylvania a fourth species of awards, which differs . . . in this, that the [referees'] report, when approved by the court, is to be proceeded on, as a verdict, by judgment, and then by execution or scire facias, as the case may be, not by attachment.”Footnote 58 Chief Justice M'Kean of the Pennsylvania Supreme Court had earlier reached the same conclusion and had noted a difference between the 1698 Lockean statute and the 1705 defalcation statute:
This act differs essentially from the statute of W. 3. in many respects, but particularly, that to render a report, or award, valid and effectual, the former requires, that it be approved by the Court; but no such provision is made by the latter, and, therefore, awards under rules of Court, are conclusive in England, unless some corruption, or other misbehaviour, in the Arbitrators is proved.Footnote 59
In Pennsylvania, a close cousin to the arbitration process was a procedure called an “amicable action.” This procedure was also linked to the 1705 defalcation statute, and it was used to collect debts.Footnote 60 The action took the form of a judgment of confession, which was a “judgment entered on an acknowledgment of indebtedness without the formality, time or expense, involved in an ordinary adverse proceeding.”Footnote 61 Judgments in amicable actions had the finality of a jury verdict,Footnote 62 the parties agreed to forego the usual steps in instituting formal actions, and courts, in turn, indulged the informal processes that parties used.Footnote 63 Because of the laxity with which amicable actions were used, confusion was inevitable. As stated by Robert Sprenkle:
[U]nfortunately, in practice, the distinction between the confession of judgment by an attorney and the entry of judgment by the prothonotary and the different procedures has not always been maintained. Much of the confusion of the legal principles in the reported decisions is caused by this failure to maintain the distinction between the various methods for the confession of judgment.Footnote 64
Manuscripts from Pennsylvania State Archives
Our survey of manuscript sources in Pennsylvania reveals that amicable actions and rules of reference were both widely used to settle disputes over debt and other matters. There were at least three amicable action patterns. In some cases the defendant confessed judgment without dispute and without the intervention of a neutral third party. In other cases, amicable actions were set down for trial, with a jury determining whether the defendant owed the plaintiff any money, and if so, how much. In a third variation, amicable actions were referred to arbitrators for resolution.Footnote 65 More common than any of these amicable actions, however, was the familiar rule of reference.
As discussed previously, Justice Story in Tobey v. Bristol claimed that arbitration in America was neither useful nor convenient.Footnote 66 However, contrary to Justice Story's assertion, Pennsylvania courts had long recognized the use and value of arbitration agreements. A sampling of submissions taken from the Eastern District of Pennsylvania from 1785 to 1806 illustrates the extent to which parties used arbitration to settle their claims.Footnote 67 A wide cross-section of people used both rules of reference and amicable actions.Footnote 68 Of 300 cases that we examined, 229 were rules of reference and 71 were amicable actions.Footnote 69 Some of the wealthiest and most prominent Pennsylvanians of the day used arbitration, including Benjamin Franklin, Oliver Pollock,Footnote 70 John Nixon,Footnote 71 and Stephen Girard,Footnote 72 several of whom were repeat players. Judging from the rough hand and tortured spelling and grammar of some of the agreements, a substantial number of uneducated members of the lower social classes also participated in the arbitration process. Participants in the arbitration process used it for a variety of purposes, including property disputes,Footnote 73 determining property boundaries,Footnote 74 interpreting wills,Footnote 75 ejectments, and maritime law.Footnote 76 Parties sometimes gave the referees the power to order interrogatories,Footnote 77 depositions,Footnote 78 and other evidence.Footnote 79 The referees at times had extraordinary powers, and the prothonotaries often served as more than mere clerks. There were times when parties could not agree on referees, in which case the prothonotaries would appoint them.Footnote 80 Or, if the case had been set for trial, the jurors could simply become the referees.Footnote 81
One aspect of Justice Story's criticisms of arbitration had at least partial validity. As he said, “we all know, that arbitrators, at the common law, . . . are not ordinarily well enough acquainted with the principles of law or equity, to administer either effectually, in complicated cases; and hence it has often been said, that the judgment of arbitrators is but rusticum judicium.”Footnote 82 There were instances in which the referees stated that the issues submitted to them were too complex for them to resolve, so they returned the case to the court.Footnote 83 These cases were, however, the exceptions. Certain referees were highly sought after because of mercantile expertise that enabled them to resolve complicated disputes.Footnote 84 Often, referees were lawyers or men who had some knowledge of the law.Footnote 85 Based on the representative sample of arbitration practice that we examined, it is easy to see that, by the late eighteenth century Pennsylvanians were quite comfortable using arbitration as a means of solving legal disputes.
The 1698 Lockeian Statute, 1705 Defalcation Statute, and the Remedy of Attachment
A question not yet squarely addressed is whether all aspects of the 1698 English statute were operational in Pennsylvania during the eighteenth century. We earlier noted the remarks of Chief Justice M'Kean and President Judge Addison on the differences between the 1705 Defalcation Act and the 1698 Locke statute.Footnote 86 A report of the Pennsylvania Supreme Court judges to the state Senate and House of Representatives in December 1808, however, stated that the Lockeian statute had long been in force and ought to be incorporated in Pennsylvania law, despite the passage of the statutes in 1806 and 1808.Footnote 87 After much deliberation,Footnote 88 the judges wrote in a prefatory note that all the statutes that followed in the report were then in force in Pennsylvania, of which 9 and 10 Will. 3, ch. 15 was one and ought to be considered to have been incorporated.Footnote 89 Subsequently, multiple nineteenth century legal digests confirmed that the 1698 Lockeian statute had been adopted in Pennsylvania.Footnote 90
The genius of the 1698 English statute, of course, was to extend the remedy of attachment for contempt to the enforcement of arbitration agreements or awards even though there was no lawsuit pending. And in view of the language of President Judge Addison in Lessee of Dixon,Footnote 91 it would not appear that the remedy of attachment had been available in Pennsylvania, at least not before the adoption of the “Lockean” legislation of 1806 and 1808. However, according to the editor of the first American edition of Kyd's Treatise on the Law of Awards, the remedy had been allowed, despite “the declaration of a very experienced lawyer, that it had never been known to the Pennsylvania practice.”Footnote 92
Here was the problem that prompted the Pennsylvania courts to permit the remedy of attachment in specific cases, even without statutory sanction. Arbitrators would at times issue awards that required one side to pay money and the other side to perform an act, such as to return specific property. For example, in Buckley v. Durant,Footnote 93 a trover action, referees ordered plaintiff to pay the defendant £3 and the defendant to return certain articles for which the action had been brought. The defendant's counsel argued that the order could not be enforced, as the 1705 statute declared that the referees' report was to be the equivalent of a verdict, and a verdict in a trover action could only decide money damages, but could never order the restoration of specific chattels. The court allowed the parties to refer the matter back to arbitration and gave no opinion, but according to Dallas, inclined strongly toward defendant's counsel's opinion.Footnote 94
Some years later, in Levezey v. Gorgas,Footnote 95 the Pennsylvania Supreme Court confirmed an award in a trespass action that included specific orders about the height of a dam, orders that could never have been issued by a jury. The submission, however, had explicitly given the referees power to fix the height of the dam and to order any alterations to the dam that needed to be made. This prompted the editor of the first American edition of Kyd's Treatise to speculate that “the whole question is a question about terms; for if an award, totally unlike a verdict in the same cause, will nevertheless be confirmed by the court where the submission authorizes it, the only question will be, whether the award is within the submission, and if it be, it is of no consequence whether it be or be not like a verdict, or whether a judgment may be entered and execution awarded thereupon.”Footnote 96
In Kunckle v. Kunckle,Footnote 97 a case decided after Buckley but before Levezey, a report of referees was objected to because it required one party to pay money and the other to convey property, and this would allow justice on one side only, as an execution could only issue for the payment of money. The Court of Common Pleas of Philadelphia County declared that, “The determination of causes by referees under a rule of Court, has been found a practice of such general convenience and utility, for the speedy and equitable decision of controversies depending in the Courts of law, that the Judges have always encouraged and supported it.”Footnote 98 The court then observed:
Where a report of referees awards money to be paid on one side, and certain other things to be done on the other, if the Court cannot inforce both, they will certainly inforce neither. In the present case, the question will be, whether they can oblige the Plaintiff to perform his part of the award? They certainly cannot do it by execution; but if they can do it by attachment, the remedies are mutual, though not by the same kind of process. That an attachment will lie for a contempt in not performing an award of referees appears clearly to have been agreeable to the common law prior to the statute of 9 and 10 W.3. which is declared by the Judges, and appears from a perusal of the act itself, to have been made only to put agreements to refer cases never instituted in Court, upon the same footing with causes already in Court, and to be declaratory of what the law was before in the latter cases.Footnote 99
Therefore, the editor of the first American edition of Kyd's Treatise concluded that “the weight of the cases may be considered in favour of the attachment, and that also may be stated as a means of compelling the performance of an award, where a judgment and execution cannot be granted upon it.”Footnote 100 He added that the fact that this remedy was not authorized by the 1705 statute should not be much of a worry, “for if by the liberal construction of that act, the remedy it prescribes has become incompetent to the distribution of perfect justice between the parties, the provision of a new remedy follows as a consequence from the extension of the rule to new cases.”Footnote 101
The Maryland Experience
Both printed and documentary records from the seventeenth to the nineteenth centuries for the state of Maryland reflect widespread use of arbitration. For the seventeenth century, extensive Maryland records are printed in the Archives of Maryland volumes. These volumes encompass Provincial Court proceedings from 1637 to 1683, where the earliest recorded arbitrations in Maryland can be found. Records of arbitrations appear as well in other documents printed in the Archives, such as the Proceedings of the Provincial Council Footnote 102; Proceedings of the Court of Chancery Footnote 103; Proceedings of the County Courts of Kent County 1648–1679, Talbot County 1662–1674, and Sommersett County 1665–1668 Footnote 104; Proceedings of the County Court of Charles County 1666–1674 Footnote 105; and Proceedings and Acts of the Assembly of Maryland June 1771–July 1773.Footnote 106
There are, moreover, many manuscript records for county courts, mostly from the eighteenth and nineteenth centuries, but there are also a few seventeenth century documents, which are not contained in or are beyond the years covered by the printed Archives. A sampling of these records reveals references to arbitration as well. Two unique early nineteenth century manuscript “booklets” are apparently retrospective compilations made up entirely of arbitrations; one for Montgomery County,Footnote 107 the other for Frederick County.Footnote 108
The principal archival source in Annapolis that we have examined is the Judgment Record of the Provincial Court, 1658–1778. These manuscripts contain a valuable record of references to arbitration.Footnote 109 The documents are extraordinarily well preserved, and there is an index running approximately 2,000 pages showing the procedural posture of each case (each page indexing approximately thirty cases). Approximately 400 cases are indexed as references.Footnote 110 In percentage terms, the number of references to arbitration was not large: perhaps 1 in 100 cases overall. There were very few in the early years, but the number of references steadily increased over time.
Here is a representative early entry of an arbitration award as recorded in the Judgment Record for December 14, 1668 (full text):
Edmund Lindsey plaintiff v. Thomas Sprigg defendant [Morecroft for the plaintiff and Calvert for the defend]
The plt sues the defendant in a plea of trespass upon the Case for keeping and Entertaining the plt's servant by name Rob: Leeds.
Both parties having put their differences to Arbitration & Elected Mr. Thomas Nottley and Doctor John Pearce for the determining of same, doth into Court bring & present their Arbittmt, which was by the defendants Attorney Ordered that it might be accordingly Entered & Acknowledged, vizt that they the said Arbitrators do Deeme and award that the said Thomas Sprigg shall pay or cause to be paid to the said Edmund Lindsey his Executors or Assigns the Just quantity of Five Thousand pounds of good Arranoca tobacco in Caske at or near Portobacco Creek in Charles County at or before the last day of this instant month of December for which he the said Sprigg shall immediately pass his specialty to the said Lindsey for payment thereof accordingly and then the said Edmund Lindsey to give the said Sprigg a General release, witness their hands and seal,
Thomas Nottley, John Pearce—(seal)Footnote 111This award exemplifies the references to arbitration at common law that served as the model for the 1698 statute.
References in Maryland from the early days in the 1600s appear to have been almost as legalistic as court proceedings of the time. Occasionally one of the sitting judges would become one of the arbitratorsFootnote 112; counsel were always active on both sides (at least in court; probably they continued to act for their clients in the arbitration, but there is rarely evidence to show this one way or the other); disputes customarily concerned business or property matters that were settled in the currency of the day: tobacco.Footnote 113 Property disputes included occasional disagreements about slave ownership.Footnote 114 On occasion, an arbitrated dispute revealed the hard realities of the lives of the early settlers. For example, in the case of Alcocks v. Robinson (August 13, 1767),Footnote 115 plaintiff Thomas Alcocks's wife and child were killed by Indians, and some of the property taken by the Indians came into possession of Jonathan Lumbrozo. Thomas Alcocks and Lumbrozo took out an arbitration bond of 10,000 pounds of tobacco. Arbitrators William Calvert, Esq. and Zachery Wade, gentleman, found for Alcocks, awarding him 900 pounds of tobacco. Lumbrozo died before delivering on the award, and Alcocks sued the representatives of Lumbrozo's estate. The arbitration award was confirmed by the Provincial Court.
Despite their legalistic flavor, most references resulted in decision making by laymen, and reflected a popular sentiment that has been constant in England and America for centuries: a desire to control, if not avoid, the perceived avarice of the lawyers. During the early nineteenth century, anti-lawyer sentiment swept through Maryland, and according to Jeffrey Sawyer one manifestation of this sentiment was “an attempt to introduce a radical system of arbitration, to be available at the choice of either party, for the resolution of any civil litigation not cognizable by justices of the peace.”Footnote 116 Sawyer explains that, “Maryland's arbitration proposal would have allowed any civil complaint to be determined altogether outside the courts. A panel of arbitrators evenly selected by the parties would hear the evidence and make a determination…. If either party rejected the [arbitration] settlement, he could appeal to the courts, but if he failed to win a judgment more favorable than the arbitration settlement, he paid the legal costs of his opponent as well as the original award and a per diem penalty for the delay.”Footnote 117 In the end, the campaign for the bill failed.
The Maryland archival records demonstrate an early American endorsement and continuation of English arbitration practices. The records, however, give no means of identifying which cases were submissions that were entered as rules of court, as fictitious lawsuits in order to gain the remedy of attachment for contempt of court.Footnote 118 The entries that we examined seemed all to be genuine references. We did not go far beyond 1778, the year in which the General Assembly adopted legislation that included arbitration provisions directed only at references.Footnote 119 William Kilty, Chancellor of Maryland, published a report in 1811 on all English statutes that he considered properly part of the statute law of the state.Footnote 120 It was an extremely comprehensive work, and although not a formal judicial opinion, it was well-received by the Maryland courts.Footnote 121 He commented as well on English statutes that were not proper to be incorporated. As to the 1698 statute, he wrote the following:
9 and 10 William 3.–A.D. 1698
CHAP. 15. An act for determining differences by arbitration.
It would seem . . . that this statute had been considered in force in the province, or that its provisions had been extended to submissions by rule of court of actions depending therein, which was the usual mode of reference. The act of October, 1778, Ch. 21, s.8, does not appear to have provided for submissions under this statute, but to have related to causes in court, empowering the judges to give judgement on the awards; and on considering the provisions in the 9th section of that act, and the practice since, it does not appear proper that this statute should be incorporated.Footnote 122
Therefore, although Kilty acknowledged that the 1698 Lockean statute had been in force in Maryland, he concluded that the 1778 statute superseded it. However, the Court of Appeals (the highest state court in Maryland), in the 1837 case of Shriver v. State, held that the British statute remained in force alongside the 1778 state statute.Footnote 123 After surveying Kilty's entire body of work, one scholar, Bernard Steiner, concluded that Kilty was mistaken on only two statutes, one of which was 9 & 10 Will. 3.Footnote 124 Steiner's appraisal was later endorsed in multiple Court of Appeals cases, establishing that the Maryland courts recognized the 1698 English statute both before and after the 1778 Maryland statute.Footnote 125
Conclusion
In his comprehensive 1872 treatise, The Law of Arbitration and Award, John Morse referred to the 1698 English statute allowing submissions to be made rules of court, but declared that, “in the absence of statutes, the English practice has not obtained in the United States, and no judgment will be entered by the court unless the referees proceeded upon authority vested in them by a rule of court.”Footnote 126 However, statutes adopting the formula of the 1698 English act were plentiful in the colonies and early republic, as we have shown. In Pennsylvania and Maryland, moreover, the English practice was in place long before legislative affirmation. It is probable that the procedure was followed in practice in other jurisdictions, notwithstanding Morse's later claim to the contrary. Any such practice would be obscure to historians depending upon printed records. Occasional contempt cases might be reported, but it would not be apparent whether the attachment was connected to a reference or a submission.
We hope that the summary given in this article persuasively shows how untrustworthy the notion was that “the longstanding judicial hostility to arbitration agreements that had existed at English common law” also “had been adopted by American courts.”Footnote 127 Certainly, at the least, there is no evidence of any such hostility in the seventeenth and eighteenth centuries, Justice Story's opinion in Tobey v. Bristol notwithstanding. Morse's 1872 treatise on arbitration runs 632 pages, and although he relied entirely on reported cases (more than 1,800 of them), the overwhelmingly positive reception given by American courts to the arbitration process is apparent in his work. That reception is equally evident in manuscript sources, such as those that have been described from Pennsylvania and Maryland, reaching back well into the seventeenth century. Finally, the Pennsylvania courts' willingness to erect upon a narrow defalcation statute an arbitration apparatus that served all types of civil disputes is an unusual example of what can fairly be called constructive judicial activism, designed to enlarge and support the arbitration process.
