In re the Arbitration between Ladin & D. & C. Textile Corp.

Appellate Division of the Supreme Court of New York

In re the Arbitration between Ladin & D. & C. Textile Corp.

20 A.D.2d 8, 244 N.Y.S.2d 410, 1963 N.Y. App. Div. LEXIS 2862

CourtAppellate Division of the Supreme Court of the State of New York

DecidedNovember 21, 1963

StatusPublished

Cited by4 cases

This text of 20 A.D.2d 8 (In re the Arbitration between Ladin & D. & C. Textile 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 Ladin & D. & C. Textile Corp., 20 A.D.2d 8, 244 N.Y.S.2d 410, 1963 N.Y. App. Div. LEXIS 2862 (N.Y. Ct. App. 1963).

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Opinions

Steuer, J.

We believe that Special Term acted correctly in refusing to stay arbitration, though not all of us arrive at that conclusion by identical reasoning. As stated more fully in the dissenting opinion, the respondents here initiated an arbitration proceeding against respondents in the arbitration for breach of a contract and thereafter started a suit at law against other persons for inducing the breach which is the subject of the arbitration.

One Judge is of the opinion that the commencement of the action is, at most, a defense, in the same category as limitations, release, or the like, cognizable by the arbitrators and its applicability to be determined by them. We do not find it necessary to discuss the validity of this approach because our own leads us to the same result.

Respondent’s right to arbitration, absent the subsequent lawsuit, is not disputed, nor could it be. We assume that a subsequent suit waives the right to arbitration (Matter of Zimmerman v. Cohen, 236 N. Y. 15). But to constitute such a waiver the suit at law must be against the same party as against whom arbitration is sought. The dissenting opinion does not dispute this proposition and the reasons are clear. Generally speaking, a waiver does not constitute a bar unless it is intentional, that is, unless the party advisedly gives up the right. Here, it is perfectly clear that the respondent never intended to give up its contract right to arbitrate. Nevertheless, there are certain situations where conduct inconsistent with the maintenance of a right is held to show an abandonment of that right despite the desire to retain it. Such an instance would be certain kinds of uses of property obtained by a contract otherwise subject to rescission. We believe this to be such a situation. The waiver would therefore be effective if a lawsuit was started against the petitioners here, the parties to the arbitration agreement. It would not be effective if no such suit was in fact brought.

So the question in the case resolves down to whether such a suit was brought. In the action that was commenced, for reasons that are not entirely clear, the petitioners were named in the caption as parties defendant. They were never served. They did seek to appear, but their notices of appearance were rejected by the respondent. Is this the commencement of an action against them? We think not.

[10]*10The question has not arisen very frequently and the authorities are collated in the dissenting opinion. We believe that the correct rule was admirably and succinctly stated many years ago: “ It was always the case, that by a voluntary appearance the defendant admitted that regular process had been regularly served. His appearance operated upon prior irregularities and omissions by way of estoppel. But it was never the case, in any court, that a party uninvited and unwelcome, could intrude himself upon the court and the plaintiff, unless he had some right to protect which rendered such appearance necessary.” (Tracy v. Reynolds, 7 How. Prac. 327, 328.) The dissent claims that even under this statement of the law, this case presents an example of the exception that exists when the person seeking to intervene has an interest in the litigation. This would be so if he stands to suffer directly as a result of the litigation, as where property which he claims is attached or where he can be made liable for any part of the judgment that is recovered and the recovery will establish the claim against him. In other words, he has a right to appear where he is named as a defendant but not served where he otherwise would have a right to intervene. That is not the case here and, in fact, petitioners ’ interest in the lawsuit is not to protect themselves but to protect others to whom petitioners feel obliged.

Not having the requisite interest in the lawsuit, petitioners had no right to have their unsought appearances accepted and no suit was started against them. It follows that there is no bar to the arbitration, and the order denying the stay of arbitration should be affirmed.

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Steuer, J.

We believe that Special Term acted correctly in refusing to stay arbitration, though not all of us arrive at that conclusion by identical reasoning. As stated more fully in the dissenting opinion, the respondents here initiated an arbitration proceeding against respondents in the arbitration for breach of a contract and thereafter started a suit at law against other persons for inducing the breach which is the subject of the arbitration.

One Judge is of the opinion that the commencement of the action is, at most, a defense, in the same category as limitations, release, or the like, cognizable by the arbitrators and its applicability to be determined by them. We do not find it necessary to discuss the validity of this approach because our own leads us to the same result.

Respondent’s right to arbitration, absent the subsequent lawsuit, is not disputed, nor could it be. We assume that a subsequent suit waives the right to arbitration (Matter of Zimmerman v. Cohen, 236 N. Y. 15). But to constitute such a waiver the suit at law must be against the same party as against whom arbitration is sought. The dissenting opinion does not dispute this proposition and the reasons are clear. Generally speaking, a waiver does not constitute a bar unless it is intentional, that is, unless the party advisedly gives up the right. Here, it is perfectly clear that the respondent never intended to give up its contract right to arbitrate. Nevertheless, there are certain situations where conduct inconsistent with the maintenance of a right is held to show an abandonment of that right despite the desire to retain it. Such an instance would be certain kinds of uses of property obtained by a contract otherwise subject to rescission. We believe this to be such a situation. The waiver would therefore be effective if a lawsuit was started against the petitioners here, the parties to the arbitration agreement. It would not be effective if no such suit was in fact brought.

So the question in the case resolves down to whether such a suit was brought. In the action that was commenced, for reasons that are not entirely clear, the petitioners were named in the caption as parties defendant. They were never served. They did seek to appear, but their notices of appearance were rejected by the respondent. Is this the commencement of an action against them? We think not.

[10]*10The question has not arisen very frequently and the authorities are collated in the dissenting opinion. We believe that the correct rule was admirably and succinctly stated many years ago: “ It was always the case, that by a voluntary appearance the defendant admitted that regular process had been regularly served. His appearance operated upon prior irregularities and omissions by way of estoppel. But it was never the case, in any court, that a party uninvited and unwelcome, could intrude himself upon the court and the plaintiff, unless he had some right to protect which rendered such appearance necessary.” (Tracy v. Reynolds, 7 How. Prac. 327, 328.) The dissent claims that even under this statement of the law, this case presents an example of the exception that exists when the person seeking to intervene has an interest in the litigation. This would be so if he stands to suffer directly as a result of the litigation, as where property which he claims is attached or where he can be made liable for any part of the judgment that is recovered and the recovery will establish the claim against him. In other words, he has a right to appear where he is named as a defendant but not served where he otherwise would have a right to intervene. That is not the case here and, in fact, petitioners ’ interest in the lawsuit is not to protect themselves but to protect others to whom petitioners feel obliged.

Not having the requisite interest in the lawsuit, petitioners had no right to have their unsought appearances accepted and no suit was started against them. It follows that there is no bar to the arbitration, and the order denying the stay of arbitration should be affirmed.

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20 A.D.2d 8, 244 N.Y.S.2d 410, 1963 N.Y. App. Div. LEXIS 2862, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-arbitration-between-ladin-d-c-textile-corp-nyappdiv-1963.

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