230 N.Y. 261, Berkovitz v. Arbib & Houlberg, Inc.

Citation:230 N.Y. 261
Party Name:In the Matter of the Application of HERMAN BERKOVITZ et al., Appellants, v. ARBIB & HOULBERG, INC., Respondent. SPIRITUSFABRIEK ASTRA OF AMSTERDAM, HOLLAND, Respondent, v. SUGAR PRODUCTS COMPANY, Appellant.
Case Date:March 01, 1921
Court:New York Court of Appeals

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230 N.Y. 261

In the Matter of the Application of HERMAN BERKOVITZ et al., Appellants,

v.

ARBIB & HOULBERG, INC., Respondent. SPIRITUSFABRIEK ASTRA OF AMSTERDAM, HOLLAND, Respondent,

v.

SUGAR PRODUCTS COMPANY, Appellant.

New York Court of Appeal

March 1, 1921

Argued January 18, 1921.

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COUNSEL

David Steckler and Emil Weitzner for Herman Berkovitz et al., appellants. The legislature intended the Arbitration Law to apply to a contract which was made before its enactment where the controversy arose after its enactment. (Matter of Hamlin, 226 N.Y. 407; Allen v. Stevens, 161 N.Y. 122; People v. Angle, 109 N.Y. 564; Clark Implement Co. v. Wadden, 34 S.D. 550; Sturges v. Carter, 114 U.S. 511; People ex rel. Collins v. Spicer, 99 N.Y. 225; Laird v. Carton, 196 N.Y. 169; Blauvelt v. Woodworth, 31 N.Y. 285; Meacham v. Jamestown R. R. Co., 211 N.Y. 346; U.S. A. Refining Co. v. T. L. Petroleum Co., 222 F. 1006.) The statute is constitutional. (Burch v. Newbury, 10 N.Y. 374; White v. White, 154 A.D. 250; Sampeyeac v. U.S. 7 Pet. 222; Chicago & Alton R. Co. v. Tranbarger, 238 U.S. 67; Second Employers Liability Cases, 223 U.S. 1; League v. Texas, 184 U.S. 156; Ewell v. Daggs, 108 U.S. 143; Watson v. Mercer, 8 Pet. 88; Brearley School v. Ward, 201 N.Y. 358; Gildersleeve v. People, 10 Barb. 35.)

Clarence M. Lewis and Jay Leo Rothschild for Sugar Products Company, appellant, and as amicus curiae. The legislature intended that the Arbitration Law should apply to contracts made prior to its passage. (Palmer v. Van Santvoord, 153 N.Y. 612; Allen v. Stevens, 161 N.Y. 122; People v. Angle, 109 N.Y. 564; Binninger v. New York, 80 A.D. 438; U.S. A. Refining Co. v. T. L. Petroleum Co., 222 F. 1006.) An agreement that all differences arising under a contract shall be submitted to arbitration relates to the law of remedies. (Meacham v. Jamestown, F. & C. R. R. Co., 211 N.Y. 346; U.S. Asphalt Refining Co. v. Trinidad Lake Petroleum Co., 222 F. 1006; Aktieselskabet K. F. K. v. Redieri Aktliebolaget Atlanten, 232 F. 403; 250 F. 935;

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The Eros, 241 F. 186.)It is settled that legislation affecting remedies is applicable to pending actions arising out of previous events. (Peace v. Wilson, 186 N.Y. 403; Matter of Davis, 149 N.Y. 539; Sackheim v. Pigueron, 215 N.Y. 62; Zimmermann v. Ullmann, 173 A.D. 650; Gazzola v. O'Brien, 169 A.D. 602; Skelton v. Lehigh Valley R. R. Co., 164 A.D. 789; Nicholson v. City of New York, 85 Misc. 563; 165 A.D. 921; Brearley School v. Ward, 201 N.Y. 358; Laird v. Carton, 196 N.Y. 169; Hedges v. Keiser, 135 A.D. 12.) The Arbitration Law does not violate article 1, section 10, of the United States Constitution prohibiting the state from passing laws 'impairing the obligations of contracts.' (National Surety Co. v. Architectural Co., 226 U.S. 276; Ewell v. Daggs, 108 U.S. 143; Gross v. United States Mortgage Co., 108 U.S. 477; Satterlee v. Matthewson, 2 Pet. 380; Curtis v. Leavitt, 15 N.Y. 9; Southern Life Ins. & Trust Co. v. Packer & Prentice, 17 N.Y. 51.) The Arbitration Law is not unconstitutional upon the ground that it deprives plaintiff of a right to trial by jury guaranteed by section 2 of article 1 of the New York State Constitution or by the Seventh Amendment to the Constitution of the United States. (People ex rel. McLaughlin v. Police Comrs., 174 N.Y. 450; Sentenis v. Ladew, 140 N.Y. 463; Cowenhoven v. Ball, 118 N.Y. 231; Matter of Cooper, 93 N.Y. 507; Baird v. New York, 74 N.Y. 382; Anderson v. Reilly, 66 N.Y. 189; People v. Quigg, 59 N.Y. 83; West Point Iron Co. v. Reymert, 45 N.Y. 703; Mulligan v. Bond & Mortgage Guarantee Co., 193 A.D. 741.) The Arbitration Law does not contravene section 1 of article 6 of the Constitution of the state of New York, providing that 'the Supreme Court is continued with general jurisdiction in law and equity.' (Davis v. Zimmerman, 91 Hun, 489.)

Julius Henry Cohen and Kenneth Dayton for Chamber of Commerce of the State of New York, amicus curiae.

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The statute applies to controversies arising from agreements for arbitration entered into before its adoption. (Sackheim v. Pigueron, 215 N.Y. 62; Holmes v. Camp, 219 N.Y. 359; Cahill v. Wissner, 183 A.D. 659; Van Rensselaer v. Snyder, 13 N.Y. 299; Laird v. Carton, 196 N.Y. 169; Peace v. Wilson, 186 N.Y. 403; Myers v. Moran, 113 A.D. 427; Matter of Davis, 149 N.Y. 539; Southwick v. Southwick, 49 N.Y. 510; Meacham v. J., F. & C. R. R. Co., 211 N.Y. 346.)Respondents are not deprived by the Arbitration Law of their constitutional right to a jury trial. (McGurty v. D., L. & W. R. R. Co., 172 A.D. 46; Snell v. N. P. Mills, 193 N.Y. 433; Sentenis v. Ladew, 140 N.Y. 463; Cowenhoven v. Ball, 118 N.Y. 231; Matter of Cooper, 93 N.Y. 507; People v. Quigg, 59 N.Y. 83; People ex rel. McLaughlin v. Police Comrs., 174 N.Y. 450; Anderson v. Reilly, 66 N.Y. 189; Boyden v. Lamb, 152 Mass. 416.) The general jurisdiction of the Supreme Court in law and equity is not unconstitutionally abridged. (Klein v. Maravelas, 219 N.Y. 383; People v. Schweinler Press, 214 N.Y. 395; The Genesee Chief v. Fitzhugh, 12 How. [ U. S.] 443; Payne v. N.Y. S. & W. R. R. Co., 157 A.D. 302; Stern v. Met. Life Ins. Co., 169 A.D. 217; 217 N.Y. 626.)

Sidney J. Loeb and Leon M. Prince for Arbib & Houlberg, Inc., respondent. The Appellate Division was correct in deciding that the Arbitration Law provides a remedy where none hitherto existed; that it, therefore, creates a new right, is not retroactive and has no effect on previously existing contracts. (Jacobus v. Colgate, 217 N.Y. 235; Morrison v. B. & O. R. R. Co., 177 A.D. 613; Metcalfe v. Union Trust Co., 87 A.D. 144; 181 N.Y. 39; Richards v. City Lumber Co., 101 Miss. 678; Stevens v. Hicks, 156 N.C. 239; Philip v. Heraty, 147 Mich. 473; Meacham v. J., etc., Ry. Co., 211 N.Y. 346; Cahill v. Wisner, 183 A.D. 659; McMaster v. State, 103 N.Y. 547.) The Arbitration Law is unconstitutional

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because it destroys the right to a trial by jury. (Gilbert v. Ackerman, 159 N.Y. 118; Ives v. S. B. Ry. Co., 201 N.Y. 271; McGurty v. D., L. & W. R. R. Co., 172 A.D. 46; Snell v. N. P. Mills, 193 N.Y. 433; Stevens v. Hicks, 156 N.C. 239; Richards v. City Lumber Co., 106 Miss. 678; Pritchard v. Norton, 106 U.S. 124; People ex rel. Swift v. Luce, 204 N.Y. 488; D. & H. C. Co. v. Penn. Coal Co., 50 N.Y. 250; Meacham v. Jamestown Ry. Co., 211 N.Y. 346.)

Henry H. Abbott and Hiram Thomas for Spiritusfabriek Astra, respondent. Plaintiff's only remedy was by action, and of that remedy it may not now be deprived. (Meacham v. Jamestown, etc., R. R. Co., 211 N.Y. 346; Graham v. Keteltas, 17 N.Y. 491; Hurst v. Litchfield, 39 N.Y. 377; U.S. Asphalt Ref. Co. v. T. L. Petroleum Co., 222 F. 1006; The Eros, 241 F. 186; Sanford v. Commercial Travelers Mut. Acc. Assn., 86 Hun, 380; 147 N.Y. 326; Benson v. Eastern B. & L. Assn., 174 N.Y. 84; Nashua River Paper Co. v. Hammermill Paper Co., 223 Mass. 8; L. R. 1916, A.D. 691.) The Arbitration Law is not retroactive. (People ex rel. Union Ins. Co. v. Nash, 111 N.Y. 310; United States v. American Sugar Ref. Co., 202 U.S. 563; Huttlinger v. Royal Dutch West India Mail, 180 A.D. 114; O'Reilly v. Utah, etc., Stage Co., 87 Hun, 406; Isola v. Weber, 147 N.Y. 329; Jacobus v. Colgate, 217 N.Y. 235; McMaster v. State, 103 N.Y. 547; N.Y. & O. M. R. R. Co. v. Van Dorn, 57 N.Y. 473; Stephens v. Hicks, 156 N.C. 239; Helme v. Buckelew, 229 N.Y. 363.) The Arbitration Law violates the provision of the State Constitution by which the Supreme Court is continued with general jurisdiction in law and equity. (Art. VI, § 1; Gilman v. Tucker, 128 N.Y. 190; Benson v. Eastern B. & L. Assn., 174 N.Y. 83; Meacham v. J., etc., R. R. Co., 211 N.Y. 346; Sanford v. Comcl. T. M. A. Assn., 86 Hun, 350; 147 N.Y. 326; Baltimore & Ohio R. R. Co. v. Stankard, 56 Ohio St. 224;

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Myers v. Jenkins, 63 Ohio St. 101; De Hart v. Hatch, 3 Hun, 375; Alexander v. Bennett, 60 N.Y. 204; People ex rel. Mayor, etc., v. Nichols, 79 N.Y. 582; People ex rel. Swift v. Luce, 204 N.Y. 478.)The Arbitration Law, if retroactive, would violate section 2 of article 1 of the State Constitution which guarantees the right to a jury trial. (Steck v. Colorado F. & I. Co., 142 N.Y. 236; Snell v. Niagara Paper Mills, 193 N.Y. 433; Sanford v. Commercial Travelers, etc., Assn., 86 Hun, 380, 383; 147 N.Y. 326; Insurance Co. v. Morse, 20 Wall. [ U. S.] 445; Kneettle v. Newcomb, 22 N.Y. 249; Shapley v. Abbott, 42 N.Y. 443; M. & S. L. R. R. Co. v. Bombolis, 241 U.S. 211.) The Arbitration Law, if retroactive, would impair the obligations of contracts, in violation of section 10 of article 1 of the Federal Constitution. (McCracken v. Hayward, 2 How. [ U. S.] 608; Barnitz v. Beverley, 163 U.S. 118; McGahey v. Virginia, 135 U.S. 662; Western Nat. Bank v. Reckless, 96 F. 70; Morris v. Henry, 221 N.Y. 96.)

CARDOZO, J.

The validity of the Arbitration Law (L. 1920, ch. 275; Consol. Laws, ch. 72), and its application to existing contracts and pending actions, are the questions here involved.

In one case (Matter of Berkovitz & Spiegel), a contract for the sale of goatskins was made in November, 1919.It provides that the skins shall 'be the usual quality of their kind, and claims in regard thereto shall not invalidate this contract, but shall be settled amicably or by arbitration in the usual manner.' The skins, which came from India, arrived in New York on April 12, 1920. The Arbitration Law took effect on April 19 of the same year. The buyer, after inspection of the goods, gave notice of rejection. The seller demanded arbitration, and moved, under the statute, for the appointment of an arbitrator. The appointment was refused at Special Term and at the Appellate Division, the latter court

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holding that the Arbitration Law did not apply to pre-existing contracts.

In the second case...

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