In Re Arbitration Between S. M. Wolff Co. & Tulkoff

174 N.E.2d 478, 9 N.Y.2d 356, 214 N.Y.S.2d 374, 1961 N.Y. LEXIS 1362
CourtNew York Court of Appeals
DecidedMarch 30, 1961
StatusPublished
Cited by10 cases

This text of 174 N.E.2d 478 (In Re Arbitration Between S. M. Wolff Co. & Tulkoff) is published on Counsel Stack Legal Research, covering New York Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Arbitration Between S. M. Wolff Co. & Tulkoff, 174 N.E.2d 478, 9 N.Y.2d 356, 214 N.Y.S.2d 374, 1961 N.Y. LEXIS 1362 (N.Y. 1961).

Opinion

Fuld, J.

The novel question presented by this appeal is whether section 1451 of the Civil Practice Act authorizes a stay of proceedings brought in violation of an arbitration contract, where such proceedings are pending, outside of New York State, before an administrative agency of the Federal Grovernment.

The petitioner, Wolff Company, Inc. (a corporation), just as its predecessor, Wolff Company (a partnership), is a broker or agent dealing in perishable agricultural commodities, while the respondent, Tulkoff’s Horse Radish Products Co., is a dealer in perishable agricultural commodities. The petitioners, corporation and partnership, doing business in New York, and the respondent, a partnership doing business in Maryland, are licensed pursuant to the provisions of the Perishable Agricultural Commodities Act (U. S. Code, tit. 7, §§ 499a-499s).

In late January, 1959 and early February, 1959, Wolff Company, the partnership, and Tulkoff’s engaged in negotiations by telephone concerning the purchase of Japanese horseradish roots. According to an affidavit submitted on behalf of the petitioners, these telephone conversations ‘1 were finalized, subject to written confirmation” on or about February 5, 1959 and, shortly thereafter, a letter was sent in which Wolff Company advised Tulkoff’s that it would mail * * * as soon as possible copies of Contracts as well as facsimile Credit *360 Letter ”. On February 6, Wolff Company sent the respondents two “ Bought Notes ”, covering the purchase in question, which contained broad arbitration provisions.

The respondents’ version of the sale agrees in all particulars with that of the petitioners except that they insist that the sale was verbal, without any discussion concerning arbitration of future controversies, and they point to the letter of February 5, as well as the “ Bought Notes ”, as confirmation of an already consummated sale. It is on this basis that Tulkoff’s urges that no agreement or consent to arbitrate any dispute was ever made.

In March of 1959, the horseradish roots arrived from Japan and were accepted and paid for by Tulkoff’s. Thereafter, on May 29, Tullcoff’s lodged a preliminary complaint with the United States Department of Agriculture claiming that all shipments failed “to grade according to contract” and that the merchandise was unfit for resale purposes. This preliminary complaint, filed pursuant to subdivision (a) of section 6 of the Perishable Agricultural Commodities Act (U. S. Code, tit. 7, § 499f), was followed in August by a “hearing” before the Agricultural Marketing Service, the purpose of which was to “ achieve a settlement between the parties ”. No settlement was reached, however, and Tulkoff’s lodged a formal complaint with the Department of Agriculture in October, 1959.

This complaint, requiring an answer within 20 days, was served on the petitioners in late December, but they requested and received permission to put off their time to answer. However, instead of interposing an answer in the proceeding in the Department of Agriculture, the petitioners, relying on the arbitration provision in the “ Bought Notes ” which they had sent to the respondents, filed the petition now before us for a stay of the proceedings before the Agriculture Department.

In opposition to the petition for a stay, Tulkoff’s alleged (1) that its rights under the Perishable Agricultural Commodities Act may not be vitiated by an arbitration agreement; (2) that the court has no jurisdiction to stay a proceeding pending before a Federal administrative agency; (3) that no agreement or contract exists between the parties requiring arbitration; and (4) that the petitioners have waived any purported right to compel arbitration.

*361 In denying the motion for a stay, the court at Special Term placed its decision upon the ground that it was ‘ ‘ without power to stay the Federal proceeding ”, The Appellate Division affirmed, and the appeal is before us by our permission.

The grant of rights under the Perishable Agricultural Commodities Act was not designed to preclude resort to other statutory or common-law remedies. The statute unequivocally declares that liability under the act ‘ may be enforced either

(1) by complaint to the Secretary as hereinafter provided, or (2) by suit in any court of competent jurisdiction”, and it goes on to provide that this section shall not in any way abridge or alter the remedies now existing at common law or by statute, and the provisions of this chapter are in addition to such remedies” (U. S. Code, tit. 7, § 499e; also, § 499o; see Le Roy Dyal Co. v. Allen, 161 F. 2d 152, 157; Krueger v. Acme Fruit Co., 75 F. 2d 67). The question then arises whether the remedy sought by the petitioners, a stay, is available. The respondents claim that it is not, contending that section 1451 of the Civil Practice Act empowers the New York courts to stay only actions or proceedings pending in New York tribunals and that, accordingly, in this ease the court had no jurisdiction to stay the administrative proceeding before the United States Department of Agriculture.

The argument lacks merit; the courts of this State possess the power to stay proceedings wherever they may be pending. Had it been the design of our Legislature to limit the stay, as urged by the respondents, words were at hand to reflect that design. The Federal arbitration statute, for instance, sanctions a stay only of an action or proceeding ‘1 brought in any of the courts of the United States ” (U. S. Code, tit. 9, § 3). The broad, unqualified language of the New York statute, in sharp contrast with this, simply recites that ‘1 If any action or proceeding be brought upon any issue otherwise referrable to arbitration * * * the supreme court * * * shall stay all proceedings in the action or proceeding” (Civ. Prac. Act, § 1451). The absence of limiting words is, as suggested, significant, bespeaking as it does an intention that the Supreme Court is empowered to stay actions or proceedings irrespective of where they may have been instituted.

The purpose of a stay is to enforce a contractual obligation to arbitrate by preventing other actions or proceedings ineon *362 sistent with that obligation. If onr courts may only prevent inconsistent actions or proceedings in the courts or administrative agencies of this State, they will only be providing partial enforcement of the promise to arbitrate; if the'court’s power to stay were thus limited, the obligation of the contract could easily be frustrated by the prosecution of actions or proceedings in another jurisdiction.

At common law, “ Arbitration agreements * * * meant very little ” because they were not subject to specific enforcement. (See Matter of Feuer Transp. [Local No. 445], 295 N. Y. 87, 91.) It was dissatisfaction with this situation that led to the enactment of our Arbitration Law. And, as this court observed in the Feuer Transportation case (295 N. Y., at p. 91), ‘ ‘ Under the new statute.

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Bluebook (online)
174 N.E.2d 478, 9 N.Y.2d 356, 214 N.Y.S.2d 374, 1961 N.Y. LEXIS 1362, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-arbitration-between-s-m-wolff-co-tulkoff-ny-1961.