Meacham v. Jamestown

• Decision Date: 02 June 1914
• Court: New York Court of Appeals Court of Appeals
• Parties: MEACHAM v. JAMESTOWN, F. & C. R. CO.

211 N.Y. 346

105 N.E. 653

MEACHAM

v.JAMESTOWN, F. & C. R. CO.

Court of Appeals of New York.

June 2, 1914.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Harry W. Meacham against the Jamestown, Franklin & Clearfield Railroad Company. From an order of the Appellate Division of the Supreme Court, First Department (151 App. Div. 941,136 N. Y. Supp. 1141), affirming a judgment dismissing the complaint entered upon the decision of the trial justice before whom the issues were severed under section 973 of the Code, plaintiff appeals. Reversed, and new trial ordered.

This action was brought by the plaintiff to recover of defendant the sum of $30,079.29, claimed to be due plaintiff as assignee for certain work performed, and materials furnished, by the Thomas McNally Company, a corporation organized under and by virtue of the laws of the state of Pennsylvania.

The Franklin & Clearfiled Railroad Company was a corporation organized under the laws of the state of Pennsylvania, and, together with other railroad corporations, was consolidated under the name of the present defendant, respondent, a corporation organized under the laws of Pennsylvania, which assumed all of the debts, liabilits, and obligations of the Franklin & Clearfield Railroad Company, including the claim in suit.

In August, 1905, the Franklin & Clearfield Railroad Company and the Thomas McNally Company made a contract in writing for the construction of a section of the Franklin & Clearfield Company's road in the state of Pennsylvania, and thereafter, as alleged by the plaintiff, the Thomas McNally Company performed work and furnished materials under said contract.

The contract in question was executed on behalf of the railroad company by its chief engineer, and on the part of the McNally Company by its president and general manager. It was conceded in the case that the contract was executed in the state of Ohio.

The contract contained the following provisions:

‘In order to prevent all disputes and misunderstandings between them in relation to any of the stipulations contained in this agreement, or their performance by either of said parties, it is mutually understood and agreed that the said chief engineer shall be and hereby is made arbitrator to decide all matters in dispute arising or growing out of this contract between them, and the decision of said chief engineer on any point or matter touching this contract shall be final and conclusive between the parties hereto, and each and every of said parties hereby waives all right of action, suit or suits or other remedy in law or otherwise under this contract or arising out of the same to enforce any claim except as the same shall have been determined by said arbitrator.’

The trial justice before whom the issue was submitted determined as matter of law that submission to the arbitrator named in the contract, the chief engineer, and an award by him was and is a valid condition precedent to the plaintiff's right to sue.

The chief engineer of the railroad company at the time of the making of the contract subsequently died and another engineer assumed the duties of his office. The trial justice held as matter of law that the person who held the office of chief engineer at the time the submission should have been made was the proper person to whom such submission should have been made, and such submission to and award by him, or offer and tender of such submission on the part of the plaintiff, was and is a valid condition precedent to plaintiff's right to sue and dismissed the plaintiff's complaint.

The judgment entered was unanimously affirmed by the Appellate Division, and plaintiff appealed to this court.Arnold L. Davis, of New York City, for appellant.

Edward A. Foote, for respondent.

HOGAN, J. (after stating the facts as above).

The trial justice held that the contract in question was to be wholly performed in the state of Pennsylvania, and, the law of that state holding the contract valid and enforceable governed its operation and effect, consequently the plaintiff could not succeed in this action for the reason that submission to arbitration was a valid condition precedent which had not been complied with.

[1] The clause of the contract, quoted in the statement of facts, confers upon the engineer, the arbitrator, power to determine the effect of any stipulation of the contract and whether or not there has been a performance of the same by either party, and to decide ‘all matters in dispute arising or growing out of the contract.’ It further provides not only that the decision of the engineer as arbitrator shall be final and conclusive between the parties, but each party ‘waives all right of action, suit or suits or other remedy in law or otherwise under this contract or arising out of the same to enforce any claim except as the same shall have been determined by said arbitrator.’

Numerous cases involving contracts containing clauses relating to arbitration have been before this court for consideration. In Prest., etc., Delaware & Hudson Canal Co. v. Pennsylvania Coal Co., 50 N. Y. 250, the question was fully considered, and a distinction made between the provisions of a contract providing that before a right of action shall accrue certain facts ahll be determined, or amounts or values ascertained, and an independent covenant or agreement to provide for the adjustment and settlement of all disputes and differences by arbitration to the exclusion of the courts. In subsequent decisions the distinction thus pointed out had been recognized and approved. Seward v. City of Rochester, 109 N. Y. 164, 16 N. E. 348;Sweet v. Morrison, 116 N. Y. 19, 22 N. E. 276,15 Am. St. Rep. 376;National Contracting Co. v. H. R. W. P. Co., 170 N. Y. 439, 63 N . E. 450;Id., 192 N. Y. 209, 84 N. E. 965.

In Guaranty Trust s. d. c/o. v. Green Cove S. & M. R. R. Co ., 139 U. S. 137-142, 11 Sup. Ct. 512, 35 L. Ed. 116, an action brought to foreclose a mortgage which provided therein that the mode of sale set forth ‘shall be exclusive of all others,’ the court held that such clause was invalid, as tending to oust the jurisdiction of the courts. In Sanford v. Accident Association, 147 N. Y. 326, 41 N. E. 694, the action was brought to recover on a certificate of insurance which contained the following clause:

‘It is hereby stipulated and agreed, by and between this association and the member named herein and his beneficiary, that the issues in any action brought against it under this certificate shall, on the demand of this association or its attorney, be referred for trial to a referee to be appointed by the court in which such action is brought.’

An order of reference made against the objection of plaintiff was reversed by the General Term, and the latter order was affirmed by this court, which held that the clause of the contract above quoted was contrary to public policy and not binding on the parties thereto.

Tested by the principles of the cases cited, we conclude that the language employed in the contract in question is susceptible of but one construction, namely, an attempt on the part of the parties to the same to enter into an independent covenant or agreement to provide for an adjustment of all questions of difference arising between the parties by arbitration to the exclusion of jurisdiction by the courts.

[2] Notwithstanding the decisions of the courts of Pennsylvania that the contract as to arbitration was valid and enforceable in that state, judicial comity does not require us to hold that such provision of a contract which is contraryto a declared policy of our courts (White v. Howard, 46 N. Y. 144;...