Gilbert v. Burnstine

• Citation: 174 N.E. 706,255 N.Y. 348
• Parties: GILBERT v. BURNSTINE et al.
• Decision Date: 13 January 1931
• Court: New York Court of Appeals

255 N.Y. 348

174 N.E. 706

GILBERT

v.BURNSTINE et al.

Court of Appeals of New York.

Jan. 13, 1931.

Action by Jacques Gillbert against Henry C. Burnstine and another, individually, and as copartners, trading under the name of Burnstine & Geist. Judgment of dismissal (135 Misc. Rep. 305, 237 N. Y. S. 171) was affirmed by the Appellate Division (229 App. Div. 170, 241 N. Y. S. 54), and plaintiff appeals.

Reversed, and defendants' motion for judgment on the pleadings denied.

Appeal from Supreme Court, Appellate Division, First department.

Eugene Untermyer, Lawrence A. Steinhardt and Herbert B. Claster, all of New York City, for appellant.

Julius Henry Cohen, Kenneth Dayton, Burton A. Zorn, and George H. Kenny, all of New York City, for Chamber of Commerce of State of New York, London Chamber of Commerce, and London Court of Arbitration, amici curiae.

Henry C. Burnstine, of New York City, for respondents.

O'BRIEN, J.

The complaint was dismissed on the merits and the judgment has been affirmed.

The following facts are alleged in the complaint and admitted in the reply: In the year 1925, at New York, defendants, who are citizens and residents of this state, contracted in writing for the sale and delivery to plaintiff within the United States of a quantity of zinc concentrates. By a clause in the contract the parties agreed that all differences arising thereunder should be ‘arbitrated at London pursuant to the Arbitration Law of Great Britain.’ Differences arose concerning an alleged failure to deliver in accordance with the terms of the contract and plaintiff served notice upon defendants at New York requesting them to concur in the nomination of a certain named individual or of some other resident of London as sole arbitrator. The notice also stated that in the event of defendants' failure to concur in the nomination of an arbitrator, plaintiff would apply to the High Court of Justice of Eugland for such an appointment pursuant to the provisions of the Arbitration Act of 1889 (52 and 53 Vict. ch. 49). On defendants' failure to comply with this notice, plaintiff obtained from the King's Bench Division an order permitting him to issue a form of process which is described in the complaint as an originating summons. This process was served upon defendants at New York, and it directed them to appear at a certain time and place in London before a master in chambers so that an arbitrator might be appointed. Defendants again failed to comply and thereupon the master appointed an arbitrator. He issued a notice which was served upon defendants at New york requiring them to furnish him at a specified time and place in London with all documents relevant to the matters in dispute. This notice, like the others, was ignored by defendants. The arbitrator, after causing a peremptory notice to be served upon them, also at New York, proceeded with the arbitration at London and made an award for £46,000 against them. The complaint alleges that all these proceedings were duly had in accordance with the English Arbitration Act of 1889 and demands judgment for the amount of the award. Defendants admit their execution of the arbitration clause in the contract, but deny that they ever made submission to arbitration, and deny also that the proceedings were had in accordance with the English law. They defend this action on the ground that their agreement is contrary to public policy, that the service of the notices and the originating summons is void, that no court of England ever acquired jurisdiction of their persons or property, that the award was obtained without due process of law, and that its enforcement would deprive them of property without due process of law. They argue that the sole question in the case is whether the British court acquired personal jurisdiction in the absence of personal service upon them within British territory.

Settlements of disputes by arbitration are no longer deemed contrary to our public policy. Indeed, our statute encourages them. Contracts directed to that end are now declared valid, enforceable, and irrevocable save upon such grounds as exist at law or in equity for the revocation of any contract. Arbitration Law (Consol. Laws, c. 72), § 2; Matter of Berkovitz v. Arbib & Houlberg, 230 N. Y. 261, 130 N. E. 288;Matter of Zimmerman v. Cohen, 236 N. Y. 15, 139 N. E. 764. Defendants' agreement without reservation to arbitrate in London according to the English statute necessarily implied a submission to the procedure whereby that law is there enforced. Otherwise the inference must be drawn that they never intended to abide by their pledge. They contracted that the machinery by which their arbitration might proceed would be foreign machinery operating from the foreign court. No other fair conclusion can be drawn from their language. Their contract constitutes something more than a simple executory one subject to breach. Not only under the foreign statute but also under our own arbitration law, it has become irrevocable in the sense that one of the parties without the consent of the other cannot deprive it of its enforceability. Matter of Zimmerman v. Cohen, supra. In order, therefore, to determine the issue asserted by defendants that jurisdiction never was acquired, the question must be decided whether their agreement to submit to that jurisdiction is contrary to our public policy.

Generally, extraterritorial jurisdiction of alien tribunals, however vigorously asserted, is denied by us. Of its own force, process issued from the court of a foreign state against our citizen and served upon him here is void. Without his consent he cannot be made subject to it, but whenever he agrees to be bound by its service, his conduct presents a problem. Contracts made by mature men who are not wards of the court should, in the absence of potent objection, be enforced. Pretexts to evade them should not be sought. Few arguments can exist based on reason or justice or common morality which can be invoked for the interference with the compulsory performance of agreements which have been freely made. Courts should endeavor to keep the law at a grade at least as high as the standards of ordinary ethics. Unless individuals run foul of constitutions, statutes, decisions, or the rules of public morality, why should they not be allowed to contract as they please? Our government is not so paternalistic as to prevent them. Unless their stipulations have a tendency to entangle national or state affairs, their contracts in advance to submit to the process of foreign tribunals partake of their strictly private business. Our courts are not interested except to the extent of preserving the right to prevent repudiation. In many instances problems not dissimilar from the one presented by this case have been solved. Vigor has been infused into process otherwise impotent. Consent is the factor which imparts power. Text-writers have discussed the subject and have concluded from the authorities that nonresident parties may in advance agree to submit to foreign jurisdiction. Beale, The Jurisdiction of Courts over Foreigners, 26 Harvard Law Review, 193; Freeman on Judgments (5th Ed.) p. 3053; Goodrich Conflict of Law, p. 141; Scott, Fundamentals of Procedure, pp. 39-41. The last-named author, speaking of nonresidents, states: ‘Jurisdiction over the person of the defendant may be acquired by his consent. This consent may be given either before or after action has been brought. ...