In re the Arbitration between Waldron & Goddess

93 A.D.2d 706, 460 N.Y.S.2d 793, 1983 N.Y. App. Div. LEXIS 17537

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: April 5, 1983
• Status: Published

Opinions

— Order and judgment, Supreme Court, New York County (Blyn, J.), entered October 14,1982, denying the petition to stay arbitration, dismissing the proceeding and granting the cross motion to compel the parties to proceed to arbitration before the American Arbitration Association, affirmed, without costs, for the reasons stated by Justice Blyn at Special Term. In addition, we make the following observations. The operative facts, fairly set forth in the dissent, reflect that both parties, real estate brokers employed by Cross & Brown, had agreed to submit to binding arbitration any dispute concerning the entitlement of the parties to a brokerage commission except that Goddess’ contract had expired. The employment agreements contain substantially similar provisions dealing with arbitration of disputes and direct that any dispute as to commissions is to be submitted to arbitration, either through an internal panel before three senior officers of Cross & Brown, provided both parties agreed to the resolution of the dispute by that internal mechanism or, if they fail to so agree, before the American Arbitration Association (AAA). The clear intention is that any dispute regarding commissions between the company and any employee or between employees be settled by arbitration. Here, Goddess demanded arbitration before the AAA under the terms of the separate employment agreements which both she and Waldron had entered into with their employer. The dissent relies, in large part, upon the circumstance that Goddess’ employment contract expired on December 28, 1979, well before the dispute between the parties arose. From this, our dissenting colleagues conclude that since Goddess was not then subject to a written employment agreement providing for arbitration of disputes, Waldron could not compel her to proceed to arbitration. Accordingly, they conclude since there is no mutuality of obligation, Goddess may not seek arbitration. However, the dissent overlooks the analysis of Special Term, with which we are in agreement, that despite Goddess’ status as an employee at will during the period subsequent to expiration of her written agreement, the parties continued to abide by the principal terms and conditions of employment contained in the prior agreement with respect to, inter alia, compensation, commission rates and draw. Undisputed is the assertion by Goddess that “both Cross & Brown and I have continued to abide by the terms and conditions of my contract and consider all of the provisions of my contract to have been extended and to be in full force and effect.” Thus, although she was an employee at will, the terms of employment, including the provision with respect to arbitration, continued beyond the expiration of the written agreement. The fact that, in 1980, subsequent to expiration of the written agreement, Goddess rejected her employer’s offer of a new written contract is not dispositive. The rejected agreement did provide for arbitration of disputes but, in lieu of arbitration before the AAA, it provided for arbitration before the Real Estate Board of New York, Inc. It does not appear whether this change in the arbitration forum was one of the factors which might have influenced Goddess in electing not to sign the new contract. Nor does it have any significance since the parties continued, in all material respects, to abide by the terms of the prior agreement after its stated expiration. We also disagree with the conclusion of the dissent that the parties may not be compelled to proceed to arbitration because of any lack of mutuality of obligation. To the contrary, the enforceability of an agreement is dependent upon the existence of consideration, not mutuality of obligation. On this basis, an agreement is unenforceable only where want of mutuality would leave a party without valid or available consideration to support his promise (Matter ofRiccardi [Modern Silver Linen Supply Co.], 45 AD2d 191, affd 36 NY2d 945; Aegis Prop. Servs. Corp. v Mihalski, 91 AD2d 577 [affd for reasons stated by Myers, J., at Special Term]; 1A Corbin, Contracts, § 152). In Aegis Prop. Servs. Corp. {supra), decided December 23, 1982, we dealt with this subject of mutuality and sustained an arbitration clause which gave only one party the right to demand arbitration, holding that what was crucial to the validity of the agreement was the existence of consideration, not mutuality of obligation. In that case, respondent was employed by petitioner as a real estate salesman under an agreement for compensation by commission. The agreement provided that in the event that the salesman did not accept the division of commission, as determined by Aegis, he had the right to arbitrate. In seeking to stay arbitration, Aegis argued the unenforceability of the arbitration clause based upon lack of mutuality. This was rejected by Special Term, finding the defense of lack of mutuality inapplicable and observing “[i]t would not have made any sense for Aegis to have also given itself the right to submit to arbitration a determination as to division of commissions which it had itself made.” Concluding that there was consideration to support the agreement, the court denied the petition and directed the parties to proceed to arbitration. We affirmed. Similarly, here, not only is there adequate consideration to support the agreement by Waldron to submit to arbitration but his agreement in haec verba provides that the arbitration procedure “shall also apply in the event that any such dispute or difference may involve an employee or employees of the corporation in addition to the employee whether or not such other employee or employees submit to arbitration.” (Emphasis added.) Clearly, what the parties contemplated was a situation where one of two employees sought to resolve a dispute as to commissions by resort to arbitration, albeit the other employee might not have expressly agreed to that procedure. The employer’s interest, explicitly manifested, was to avoid litigation, whenever possible, and to confer some benefit upon itself and such other employees “whether or not such other employee or employees submit to arbitration.” Therefore, it may not be concluded that an employee in the position of Goddess was only an incidental beneficiary. The position of the dissent requiring mutuality, overlooks the fact that the extension of the terms and conditions of Goddess’ agreement, including the arbitration clause, beyond the stated expiration, creates the mutuality which the dissent finds lacking. The employment at will on the same terms and conditions as existed under the prior written agreement, extended the provisions of the expired agreement, including the clause providing for arbitration of disputes (see Matter of Acadia Co. [Edlitz], 7 NY2d 348). Concur — Silverman, Fein and Kassal, JJ.