In re the Arbitration between Bauer & Motor Vehicle Accident Indemnification Corp.

31 A.D.2d 239, 296 N.Y.S.2d 675, 1969 N.Y. App. Div. LEXIS 4753
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJanuary 16, 1969
StatusPublished
Cited by6 cases

This text of 31 A.D.2d 239 (In re the Arbitration between Bauer & Motor Vehicle Accident Indemnification Corp.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re the Arbitration between Bauer & Motor Vehicle Accident Indemnification Corp., 31 A.D.2d 239, 296 N.Y.S.2d 675, 1969 N.Y. App. Div. LEXIS 4753 (N.Y. Ct. App. 1969).

Opinion

Del Vecchio, J.

These are appeals by Motor Vehicle Accident Indemnification Corporation (hereafter MVAIC) from an order and judgment” directing it to proceed to arbitration of claims by petitioners Bauer and from an order denying reargument of the prior determination.

In May, 1964 petitioners were involved in an automobile accident in Wyoming County with an allegedly uninsured motorist. On September 16, 1964 their attorney, Smallwood, whose office is located in Wyoming County, filed claims with MVAIC for compensation under the standard automobile accident indemnification endorsement attached to the liability insurance policy issued to petitioner Ethel Bauer. Following an exchange of extensive correspondence between attorney Smallwood and MVAIC, the latter advised that the claims were rejected as untimely. Thereafter, on December 8, 1967 MVAIC received from petitioners’ attorney a demand for arbitration of the claims, setting forth the provision of the automobile accident indemnification endorsement which provided for arbitration of unsettled disputes in accordance with the rules of the American Arbitration Association. The notice, which was served by certified mail, also stated that a copy of the arbitration agreement and demand was being filed with the American Arbitration Association administrator with the request that it immediately put the accident claims tribunal rules into effect.

On December 15, 1967 petitioners’ attorney received from MVAIC by certified mail, return receipt requested, a notice of petition and petition returnable January 8, 1968 in Supreme Court, New York County, for a stay of arbitration upon the grounds that the claims were untimely and lack of proof that the other vehicle was uninsured. Petitioners never appeared in the New York County proceeding, but on December 21, 1967 they obtained an order to show cause returnable in Supreme Court, Wyoming County, for an order directing arbitration and declaring MVAIC’s application for a stay in New York County void upon the ground that service upon petitioners’ attorney did not commence a special proceeding and did not confer jurisdiction over petitioners. Sustaining petitioners ’ contentions, the court in Wyoming County held that 'since service on an attorney does not meet the requirements for instituting a [241]*241special proceeding, the proceedings between petitioners herein and MVAIC pending in New York County, although prior in time of service, are without jurisdiction and a nullity ’ ’ and that MVAIC, having failed to apply for a stay within 10 days after demand for arbitration, is barred by CPLR 7503 (subd. [c]) from litigating preliminary to arbitration the issue of untimeliness or whether petitioners were injured by an uninsured motorist. (55 Misc 2d 991, 996.)

The sole question presented is whether service of the notice of petition and petition upon petitioners’ attorney, rather than upon petitioners themselves, constituted an application for a stay of arbitration under CPLR 7503 (subd. [c]).

It is clear, as petitioners contend and the court has determined, that the application for a stay of arbitration was. the institution of a special proceeding, rather than a motion in a pending legal action or proceeding (CPLR 7502, subd. [a]). Jurisdiction is obtained in a special proceeding by the service of an order to show cause, in the manner specified therein, or of a notice of petition, which shall be served in the same manner as a summons in an action (CPLR 304; 403, subds. [c], [d]). When the object of the special proceeding is to stay arbitration, an additional manner of service is provided by CPLR 7503 (subd. [c])—viz., the notice may be served by registered or certified mail, return receipt requested”.

In addition to the methods for obtaining jurisdiction provided by statute, the Court of Appeals has repeatedly held that a party may by agreement consent to the jurisdiction of a court which would not otherwise have authority over him. In Gilbert v. Burnstine (255 N. Y. 348) the court held that public policy does not forbid the appointment of an agent to accept service, or an agreement, in advance of litigation, to submit oneself to jurisdiction by subjecting oneself to process. It concluded that New York residents who executed a contract under which differences were to be “ arbitrated at London pursuant to the Arbitration Law of G-reat Britain” (p. 352) had made an “ implied submission to the terms of the act itself, and to any rules or procedural machinery adopted by competent authority in aid of its provisions. ” (p. 358).

In Pohlers v. Exeter Mfg. Co. (293 N. Y. 274, 279) the court referred to the Gilbert case and held that “ Ordinarily a court can acquire jurisdiction of the person of a defendant only by service of process within the jurisdiction of the court; but that rule does not apply where the defendant ‘ has agreed in advance to accept, or does in fact accept, some other form of service as sufficient ’.”

[242]*242In Prosperity Co. v. American Laundry Mach. Co. (297 N. Y. 486) the Court of Appeals held a New York corporation, which had agreed to arbitrate under the laws of Ohio, subject to an award made by an arbitrator appointed by an Ohio court, even though the New York corporation had not been served in Ohio with notice of the appointment as required by Ohio’s arbitration statute. The agreement was held to constitute a submission to jurisdiction of the Ohio court by consent. In reaching the same conclusion, the Appellate Division in the Prosperity Go. case quoted from Gilbert v. Burnstine (supra, pp. 353-354): “ Contracts made by mature men who are not wards of the court should, in the absence of potent objection, be enforced. Pretexts to evade them should not be sought.”

We think the same principle is applicable to the present case. Section 30 of the accident claims tribunal rules of the American Arbitration Association provides that each party to an agreement which provides for arbitration under these rules “shall be deemed to have consented and shall consent that any papers, notices or process necessary or proper for the initiation or continuation of an arbitration under these Rules and for any court action in connection therewith or for the entry of judgment on any Award made thereunder may be served upon such party (a) by mail addressed to such party or his attorney at his last known address.” The automobile accident indemnification endorsement under which petitioners’ claims are asserted expressly provides that disputed claims shall be settled in accordance with the rules of the American Arbitration Association and the demands for arbitration served upon MVAIC specifically gave notice that the Arbitration Association administrator was being requested immediately to put the accident claims tribunal rules into effect. In these circumstances we can reach no other conclusion but that petitioners had authorized and designated their attorney Small-wood, who had represented them in their unsuccessful attempts to induce MVAIC to honor their claims, as their agent upon whom service of process might be made for the commencement of a special proceeding to stay arbitration.

The United States Supreme Court has recognized that both under Federal and New York State law service on an agent designated by contract for such purpose is a valid predicate for the assertion of in personam jurisdiction over the principal making the designation (National Rental v. Szukhent,

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31 A.D.2d 239, 296 N.Y.S.2d 675, 1969 N.Y. App. Div. LEXIS 4753, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-arbitration-between-bauer-motor-vehicle-accident-nyappdiv-1969.