Necchi v. Necchi Sewing Machine Sales Corp.

348 F.2d 693, 1965 U.S. App. LEXIS 4880
CourtCourt of Appeals for the Second Circuit
DecidedJuly 15, 1965
DocketNos. 336, 337, Dockets 29339, 29340
StatusPublished
Cited by32 cases

This text of 348 F.2d 693 (Necchi v. Necchi Sewing Machine Sales Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Necchi v. Necchi Sewing Machine Sales Corp., 348 F.2d 693, 1965 U.S. App. LEXIS 4880 (2d Cir. 1965).

Opinion

MARSHALL, Circuit Judge:

From 1948 through 1963, Necchi Sewing Machine Sales Corporation (hereinafter “the Sales Corp.”) was the exclusive American distributor of sewing machines manufactured by Necchi. This relationship was based on a series of contracts ; the one involved in these appeals was executed on July 18,1961 and amended by a subsequent agreement dated January 18, 1962 whereby the exclusive distributorship was extended until December 31, 1963.

The 1961 agreement provided that “All matters, disputes or disagreements arising out of or in connection with this Agreement shall be finally settled” by arbitration, and this provision was invoked when the relations between Necchi and the Sales Corp. deteriorated at the end of 1963 upon the refusal of Necchi to renew the exclusive distributorship with the Sales Corp.1 In January and March of 1964 the Sales Corp. demanded that certain disputes be arbitrated, and on May 22 of that year it sent a letter to Necchi, set out in the appendix, detailing its demand for arbitration. The arbitration provision gave the party upon whom a demand to arbitrate was served thirty days to appoint an arbitrator; and this period expired on June 22. On that date, having not yet appointed an arbitrator, Necchi commenced an action in the District Court for the Southern District of New York. Jurisdiction was based on diversity of citizenship, 28 U.S.C. § 1332, and, pursuant to 28 U.S.C. § 2201, Necchi sought a declaratory judgment that the items tendered by the Sales Corp. for arbitration were not arbitrable. On the same day, June 22, the Sales Corp., pursuant to sections 4 and 5 of the Federal Arbitration Act, 9 U.S.C. §§ 4, 5, petitioned the District Court for the Southern District of New York to appoint a second arbitrator and to direct Necchi to proceed to arbitration. The petition alleged diversity jurisdiction and also that the 1961 agreement evidenced transactions in interstate and foreign commerce.

[696]*696In an order dated September 3, 1964 the District Court dismissed without prejudice Necchi’s declaratory judgment action and granted the petition of the Sales Corp. Necchi was ordered to proceed to arbitration and to appoint an arbitrator within twenty days, in default of which an arbitrator would be appointed by the court. Notices of appeal were timely filed and served by Necchi in both proceedings. We affirm the order of the District Court insofar as it dismisses, without prejudice, Necchi’s declaratory judgment action, for, as the District Court correctly reasoned, the issues raised in that action can also be determined in the proceeding initiated by the Sales Corp. It was within the discretion of the District Court to dismiss the parallel and duplicative action seeking declaratory judgment, see Dr. Beck & Co. G. M. B. H. v. General Electric Co., 317 F.2d 538, 539 (2 Cir. 1963). But insofar as the order of the District Court directs Necchi to proceed to arbitration, we affirm in part and reverse in part.

The basic flaw in the order compelling Necchi to arbitrate stems from the approach of the District Court. The Court declined to decide whether the nine items listed in the Sales Corp.’s letter were “matters, disputes or disagreements arising out of or in connection with” the agreement. Instead the court took the position that this decision was to be made by the arbitrators, reasoning that “the broad scope of the arbitration provisions precludes us from [making the] preliminary inquiry as to whether the nine listed items arise ‘out of or in connection with the agreement.’ ” This was error, and quite clearly so. An order under the Federal Arbitration Act compelling a party to arbitrate is simply an order granting specific performance of an arbitration provision, Kulukundis Shipping Co., S/A v. Amtorg Trading Corp., 126 F.2d 978, 986 (2 Cir. 1942), and a court must interpret that provision to determine whether it requires arbitration on certain items prior to granting such relief. The court must decide whether the parties had agreed to submit the particular disputes to arbitration. Neither the federal policy in favor of arbitration nor the ostensible broad reach of the arbitration provision in question relieves the District Court of judicial responsibility of determining the question of arbitrability, unless the arbitration provision is so unusually broad that it clearly vests the arbitrators with the power to resolve questions of arbitra-bility as well as the merits, see United Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 583 n. 7, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1963). The arbitration provision here is broad, but not that broad.

The Supreme Court has explicitly and unanimously reserved the question of arbitrability for the courts. “Under our decisions, whether or not the company was bound to arbitrate, as well as what issues it must arbitrate, is a matter to be determined by the Court on the basis of the contract entered into by the parties,” Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241, 82 S.Ct. 1318, 1320, 8 L.Ed.2d 462 (1962). “For arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit,” United Steelworkers v. Warrior & Gulf Nav. Co., supra, 363 U.S. at 582, 80 S.Ct. at 1353. Accord, John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 547, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964). This principle has been annunciated in actions to compel arbitration that were commenced under section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, but we can perceive no reason why this principle should not be equally applicable in proceedings to compel arbitration that are like the instant one, commenced under the Federal Arbitration Act, cf. Engineers Ass’n v. Sperry Gyroscope Co., 251 F.2d 133, 135 (2 Cir. 1957), cert. denied, 356 U.S. 932, 78 S.Ct. 774, 2 L.Ed.2d 762 (1958). In fact this principle has been applied with little need for discussion in proceedings under the Federal Arbitration Act, see, e. g., Metro In[697]*697dustrial Painting Corp. v. Terminal Constr. Co., 287 F.2d 382, 385 (2 Cir.), cert. denied, 368 U.S. 817, 82 S.Ct. 31, 7 L.Ed.2d 24 (1961); Greenwich Marine, Inc. v. S.S. Alexandra, 225 F.Supp. 671, 676 (S.D.N.Y.1964), aff’d, 339 F.2d 901 (2 Cir. 1965); cf. also Reconstruction Fin. Corp. v. Harrisons & Crosfield, Ltd., 204 F.2d 366, 368, 37 A.L.R.2d 1117 (2 Cir.) (dictum), cert. denied, 346 U.S. 854, 74 S.Ct. 69, 98 L.Ed. 368 (1953).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

King v. Nevada Electric Investment Co.
893 F. Supp. 1006 (D. Utah, 1994)
Apollo Computer, Inc. v. Helge Berg
886 F.2d 469 (First Circuit, 1989)
Seaboard Coast Line Railroad v. Trailer Train Co.
690 F.2d 1343 (Eleventh Circuit, 1982)

Cite This Page — Counsel Stack

Bluebook (online)
348 F.2d 693, 1965 U.S. App. LEXIS 4880, Counsel Stack Legal Research, https://law.counselstack.com/opinion/necchi-v-necchi-sewing-machine-sales-corp-ca2-1965.