In re the Arbitration between Dembitzer

4 Misc. 2d 257, 152 N.Y.S.2d 633, 1956 N.Y. Misc. LEXIS 1826
CourtNew York Supreme Court
DecidedMay 24, 1956
StatusPublished

This text of 4 Misc. 2d 257 (In re the Arbitration between Dembitzer) is published on Counsel Stack Legal Research, covering New York Supreme Court 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 Dembitzer, 4 Misc. 2d 257, 152 N.Y.S.2d 633, 1956 N.Y. Misc. LEXIS 1826 (N.Y. Super. Ct. 1956).

Opinion

Matthew M. Levy, J.

On occasion, the road to unwanted litigation — as may often be the case in respect of other undesirable destinations• — -is paved with good intentions. I am constrained to make this lugubrious observation because of what has occurred in the instant case.

The present parties intended in good faith to avoid what were deemed to be the labyrinthine and expensive paths of the law as administered in the civil courts of our State. They agreed, therefore, to submit a controversy between them to arbitration before their industry tribunal — as a simple and prompt solution of their commercial dispute. But, unfortunately, the result has been otherwise. Chronologically noted from the record before me, the procedures involved have included the following: invocation of the arbitration machinery; procurement by the arbitrators of written statements from all the parties; determination by the arbitral tribunal of lack of jurisdiction; appeal to the arbitration appeal board of the trade association involved; institution of an action in the Supreme Court to enjoin the arbitration appeal; application in the Supreme Court for an injunction pendente lite; argument thereon, and determination that the arbitration machinery (having been contracted for) be utilized and exhausted; appeal to the Appellate Division; argument and affirmance; arbitration hearings of 18 sessions; decision and award in arbitration; commencement of special proceeding in this court to confirm the award, and a cross application to vacate it; argument thereon; study thereof [260]*260and of all that has gone before. And here I must add — ¡ regretfully— that I am unable to decree finis to the litigious activities of the parties. For, in the light of the agreement between them, I must send the parties back to their chosen tribunal for the resolution of their controversy. And thus may begin another trek along the road that was constructed in good faith and was initially paved with the best of intentions.

Now, to the facts and the contentions.

The petitioner is a diamond broker. The respondents are diamond merchants. A diamond broker acts, usually, as an intermediary between the merchant who is an anxious seller and that merchant who is a hopeful buyer. The respondent Gutchen had an option to buy certain African Gold Coast raw diamonds. Authorizedly acting on Gutchen’s behalf, the petitioner interested the respondents Lipschutz and Gutwirth in the venture, and all of the respondents agreed to join forces in a business deal concerning the acquisition of an enterprise which would purchase and sell industrial diamonds produced on the Gold Coast. A dispute arose as to the petitioner’s remuneration — he sought a brokerage fee; the respondents were willing to compensate for work done only. The petitioner was recognized by all of the parties as having brought them together, and it was agreed that he was entitled to compensation. There was, however, no express agreement as to the amount.

The parties are members of the Diamond Trade Association of America, Inc. (formerly known as Diamond Center, Inc.), hereinafter referred to as Association. The controversy was tendered for arbitration upon a written submission dated February 3, 1954, and was to proceed under the by-laws of the Association. So much of the submission as is material to the present issue reads as follows: We hereby agree to submit to the arbitration under the By-Laws of the Diamond Center, Inc., the following controversy now existing between us.

Mr. Louis Dembitzer claims having been instrumental in bringing Messrs. Alex Gutchen, Isidore Lipschutz and Charles Gutwirth together in view of an important business deal.

‘ ‘ Mr. Dembitzer claims he was acting as broker and is entitled to a brokerage fee.

Messrs. Alex Gutchen, Isidore Lipschutz and Charles Gutwirth are only willing to compensate Mr. Dembitzer for work done in bringing the parties together.

< ‘ We further agree that the above controversy be submitted for decision to the Arbitration Chamber selected in accordance with the By-Laws of the Diamond Center, Inc.”

[261]*261The arbitration machinery is contained in article XI of the by-laws. Section 7 of that article provides that (except where the Association’s board of directors gives a release — a condition not here involved) all disputes of a commercial character arising out of or connected with the diamond business, must be submitted to and determined by the Arbitration Committee ”. The arbitration committee consists of eighteen members with a director of the Association acting as chairman. The committee is divided into chambers and an arbitration proceeds in the first instance before one such chamber, consisting of three members. Section C of article XI provides that a dissatisfied party may take an appeal to the arbitration appeal board (also composed of three persons), which board shall then hear the entire case, and shall have the same powers and authority with reference to this hearing as the Arbitration Chamber. * * * The Arbitration Appeal Board may either affirm, reverse, modify or amend the decision of the Arbitration Chamber or may make an entirely new decision and award * *

On July 20,1954, the arbitration chamber rendered its “ decision and award ”, that the “ claim of the plaintiff [Dembitzer, the petitioner herein] is hereby denied, but without prejudice, as to the rights of the respective parties as Ave find the present dispute is not within the jurisdiction of this Arbitration Board as not being within the accepted meaning and definition of a dispute ‘ arising out of and connected with the diamond business.’ ” The petitioner filed a notice of appeal to the Association’s arbitration appeal board. The respondents resisted that appeal by instituting an action in this court for a declaratory judgment and for an injunction. By that action, the respondents sought to stay the petitioner’s prosecution of the appeal in arbitration and for a judgment declaring that the petitioner had no right to appeal from the dismissal by the arbitration chamber; and that if he had such right the appeal board could not consider the matter de novo, but that since the chamber had found nonjurisdiction merely, the function of the appeal board Avould be limited to a revieAV solely of that question of jurisdiction, and that, in the event of a finding of jurisdiction under the by-laAvs of the Association, there be a remission of the matter to the chamber for further proceedings on the merits. The respondents brought on a motion in the lawsuit for a temporary injunction to restrain the prosecution of the arbitration appeal. The motion was denied at Special Term and on appeal the order of denial was affirmed (285 App. Div. 928). By the denial and affirmance the respondents in effect Avere directed to exhaust [262]*262their remedies in arbitration under the by-laws of the Association before resorting to the courts.

Accordingly, the parties and their counsel attended at numerous sessions of the arbitration appeal board, and proofs were received. There were 1,209 typewritten pages of record and 45 exhibits. On September 1,1955, there was a unanimous award by the appeal board in favor of the petitioner.

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Related

Marchant v. Mead-Morrison Manufacturing Co.
169 N.E. 386 (New York Court of Appeals, 1929)
Gutchen v. Dembitzer
285 A.D. 928 (Appellate Division of the Supreme Court of New York, 1955)
Spring v. Moncrieff
208 Misc. 671 (New York Supreme Court, 1955)
Raven Electric Co. v. Linzer
97 N.E.2d 746 (New York Court of Appeals, 1951)

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Bluebook (online)
4 Misc. 2d 257, 152 N.Y.S.2d 633, 1956 N.Y. Misc. LEXIS 1826, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-arbitration-between-dembitzer-nysupct-1956.