Kurt Orban Co. v. Angeles Metal Systems

• Decision Date: 27 March 1978
• Docket Number: D,No. 397,397
• Citation: 573 F.2d 739
• Court: U.S. Court of Appeals — Second Circuit
• Parties: KURT ORBAN CO., Petitioner-Appellee, v. ANGELES METAL SYSTEMS and Newman Iron & Metal Co., as co-venturers, Respondents, Newman Iron & Metal Co., Respondent-Appellant. ocket 77-7313.

Page 739

573 F.2d 739

KURT ORBAN CO., Petitioner-Appellee, v. ANGELES METAL SYSTEMS and Newman Iron & Metal Co., as co-venturers, Respondents Newman Iron & Metal Co., Respondent-Appellant.

No. 397, Docket 77-7313.

United States Court of Appeals Second Circuit.

Argued Dec. 16, 1977.

Decided March 27, 1978.

John S. Kinzey, New York City (LeBoeuf, Lamb, Leiby & MacRae, James A. Fitzpatrick, New York City, of counsel), for respondent-appellant.

Jack Weinberg, New York City (Graubard Moskovitz McGoldrick Dannett & Horowitz, Michael H. Greenberg and Steven J. Brill, New York City, of counsel), for petitioner-appellee.

Before OAKES and VAN GRAAFEILAND, Circuit Judges, and BARTELS, ^* District Judge.

VAN GRAAFEILAND, Circuit Judge:

This is an appeal from a judgment of the United States District Court for the Southern District of New York confirming an arbitration award against appellant Newman Iron & Metal Co. We affirm.

A somewhat complicated series of events preceded the award, but a brief summary will suffice for purposes of this opinion. Appellant Newman is a California corporation which operates as a trader in steel. Appellee Kurt Orban Company is a New York corporation engaged in the importation of steel and other products. Respondent Angeles Metal Systems is the trade name of Angeles Metal Trim Co., a California corporation which is a fabricator of steel products.

In May 1974, Newman orally agreed to purchase two thousand tons of Korean steel from Orban, following which it negotiated with Angeles for the resale to it of one thousand tons. Because Newman's credit rating was poor, Angeles agreed to secure a letter of credit to cover the entire purchase. As part of the deal, title to the steel was to vest in Angeles. However, the original written purchase order and agreement which contained the arbitration clause was executed by Newman rather than Angeles. In the letter returning this contract to Orban, Newman simply directed that title to the steel when shipped vest in Angeles. Although Orban thereafter secured a written purchase order from Angeles covering the same steel, Newman never requested that it be released from its contractual commitment. Its representative testified at the arbitration hearing that he executed the contract in Newman's name because he "wanted to retain a hold on the material."

Following the execution of the above-described agreement, Newman, acting for itself and Angeles, negotiated a deal with the Jones & Laughlin Steel Corporation for the sale to it of the entire two thousand tons. This required that the steel be shipped to Camden, New Jersey instead of Los Angeles, its original destination. While the steel was on route to Camden, Jones & Laughlin canceled its order; and the letter of credit expired. Newman and Angeles then proceeded to play Alphonse and Gaston in accepting responsibility for payment of the purchase price. As a result, Orban was required to dispose of the steel at a substantial loss.

Orban then demanded arbitration against both Newman and Angeles as "co-venturers". Settlement with Angeles was thereafter agreed upon, and the arbitration proceeded against Newman alone. Newman now contends that, because the demand was against both Newman and Angeles as co-venturers, the arbitrators exceeded their authority in making an award solely against it. This argument is without merit.

Arbitrators are not required to disclose the basis upon which their awards are made, Sobel v. Hertz, Warner & Co., 469 F.2d 1211, 1214-16 (2d Cir. 1972), and they did not do so in this case. In the absence of any indication that the award was made in "manifest disregard" of the law, Wilko v. Swan, 346 U.S. 427, 436-37, 74 S.Ct. 182, 98 L.Ed. 168 (1953), courts will not look beyond the lump sum award in an attempt to analyze the reasoning processes of the arbitrators, Ballantine Books, Inc. v. Capital Distributing Co., 302 F.2d 17, 21-22 (2d Cir. 1962). "If a ground for the arbitrator's decision can be inferred from the facts of the case, the award should be confirmed." Sobel, 469 F.2d at 1216.

The claim for relief in Orban's demand for arbitration asked for a declaration of its rights and an award of damages arising out of its contract with Newman, and Orban's counsel made it clear at the outset of the arbitration proceedings that Orban's claim did not depend upon the existence of a joint venture. The arbitrators may have believed that there was no joint venture and found appellant liable as principal. The fact that the demand named...