Shanferoke Coal Supply Corporation v. Westchester Service Corporation, 211

Citation55 S.Ct. 313,79 L.Ed. 583,293 U.S. 449
Decision Date07 January 1935
Docket NumberNo. 211,211
PartiesSHANFEROKE COAL & SUPPLY CORPORATION v. WESTCHESTER SERVICE CORPORATION
CourtUnited States Supreme Court

Messrs. Alfred B. Nathan and George C. Levin, both of New York City, for petitioner.

Mr. Ernest E. Wheeler, of New York City, for respondent.

Mr. Justice BRANDEIS delivered the opinion of the Court.

This action was brought by the Shanferoke Coal & Supply Corporation, a citizen of Delaware, in the federal court for Southern New York against the Westchester Service Corporation, a citizen of the latter state. The declaration alleged that the defendant had by a contract in writing agreed to purchase from the plaintiff a large quantity of coal to be taken in installments throughout a period of years, and that the defendant had, after accepting part of the coal, repudiated the contract. The defendant set up in its answer, as a special defense, that prior to the commencement of the action a dispute had arisen concerning the construction of the contract, the rights and duties of the respective parties thereunder, and its performance, that the contract contained an arbitration clause, and that prior to the commencement of the action the defendant had notified the plaintiff of its readiness and willingness to submit the dispute to arbitration and ever since had been ready and willing to do so, but that the plaintiff had refused to proceed with the arbitration. The defendant then moved that the action, and all proceedings therein, be stayted until an arbitration should be had in accordance with the terms of the contract sued on. The motion was heard on affidavits and counter affidavits.

The arbitration clause is as follows:

'In case any dispute should arise between the Buyer and Seller as to the performance of any of the terms of this agreement, such dispute shall be arbitrated and the cost thereof shall be borne equally by both parties. The Buyer and the Seller shall each appoint one arbitrator and the two arbitrators so appointed shall select a third arbitrator and the decision of a majority of the three arbitrators shall be final and conclusive on both parties. In case for any reason any such arbitration shall fail to proceed to a final award, either party may apply to the Supreme Court of the State of New York for an order compelling the specific performance of this arbitration agreement in accordance with the arbitration laws of the State of New York.'

The District Court interpreted the clause as making the arbitration enforceable only in state courts of New York; and on that ground denied the stay. On an appeal from the order of denial, the Court of Appeals held that, even if the clause should be so interpreted, section 3 of the United States Arbitration Act (9 USCA § 3) authorized the stay.1 It therefore reversed the order and directed the District Court to grant the stay, with leave to that court 'to vacate it at any time, should it appear that the defendant is in default in proceeding with the arbitration.' 70 F.(2d) 297, 299. This Court granted certiorari 293 U.S. 541, 55 S.Ct. 95, 79 L.Ed. —-.

First. The order of the District Court denying the stay was not a final judgment appealable under section 128 of the Judicial Code, as amended (28 USCA § 225). Being an interlocutory order, it was appealable to the Circuit Court of Appeals under section 129, as amended (28 USCA § 227), only if the denial of the stay should be deemed the denial of an injunction. Compare General Electric Co. v. Marvel Co., 287 U.S. 430, 432, 53 S.Ct. 202, 77 L.Ed. 408. That question we must first determine, although it was not raised below or by counsel here. See Mansfield, etc., Ry. Co. v. Swan, 111 U.S. 379 382, 4 S.Ct. 510, 28 L.Ed. 462. For the reasons stated in Enelow v. New York Life Insurance Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440, decided this day, an order granting or denying a stay based on an equitable defense or cross-bill interposed in an action at law under section 274b (28 USCA § 398) is appealable under section 129, as amended (28 USCA § 227). We are of the opinion that the special defense setting up the arbitration agreement is an equitable defense or cross-bill within the meaning of section 274b, and that the motion for a stay is an application for an interlocutory injunction based on the special defense. Compare Red Cross Line v. Atlantic Fruit Co., 264 U.S. 109, 121, 44 S.Ct. 274, 68 L.Ed. 582. As bearing on this question of jurisdiction on appeal it is immaterial whether or not the terms of the contract sued on would preclude entry in a federal court of a decree for specific performance of the arbitration. Since the appeal here in question was taken within thirty days from the entry of the order denying the stay, the Court of Appeals had jurisdiction under section 129, as amended (28 USCA § 227).

Second. The plaintiff contends that the District Court was without power to grant the stay, because the contract provides that arbitration can be compelled only by proceedings in a state court of New York. The provision is that 'either party may apply to the Supreme Court of the State of New York for an order compelling specific performance of this arbitration agreement in accordance with the arbitration law of the State of New York.' The contract does not in terms prohibit proceedings in the federal court. Whether it should be construed so as to exclude the bringing of a suit in the federal court to compel specific performance of the agreement to arbitrate, we have no occasion to decide. For the District Court was not asked, in the proceedings now under review, to compel specific performance. The motion was to stay the action until arbitration shall have been had; and the direction of the Court of Appeals was limited to granting a stay. Section 3 of the United...

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210 cases
  • Ex parte Alabama Oxygen Co., Inc.
    • United States
    • Alabama Supreme Court
    • 13 Mayo 1983
    ...arbitration over litigation to ease the congestion of the courts. The citation to Shanferoke Coal & Supply Corp. v. Westchester Serv. Corp., 293 U.S. 449, 453 [55 S.Ct. 313, 315, 79 L.Ed. 583] (1935), was apparently to the Court's reference to 'congressional approval of arbitration.' It is ......
  • Nascone v. Spudnuts, Inc.
    • United States
    • U.S. Court of Appeals — Third Circuit
    • 26 Junio 1984
    ...judge were the same person did not matter. In a companion case decided the same day, Shanferoke Coal & Supply Corp. v. Westchester Service Corporation, 293 U.S. 449, 55 S.Ct. 313, 79 L.Ed. 583 (1935), the Supreme Court held that an order denying a defendant's motion to stay an action at law......
  • Baltimore Contractors v. Bodinger
    • United States
    • U.S. Supreme Court
    • 10 Enero 1955
    ...under § 1291. It was as surely an interlocutory order as the District Court's order in Shanferoke Coal & Supply Corp. v. Westchester Service Corp., 293 U.S. 449, 451, 55 S.Ct. 313, 314, 79 L.Ed. 583.5 The question here presented involves the interpretation of 28 U.S.C. § 1292(1), 28 U.S.C.A......
  • LOCAL 205, ETC. v. General Electric Company
    • United States
    • U.S. Court of Appeals — First Circuit
    • 25 Abril 1956
    ...an "injunction" in the wholly different context of the Norris-LaGuardia Act. Cf. Shanferoke Coal & Supply Corp. of Delaware v. Westchester Service Corp., 1935, 293 U.S. 449, 452, 55 S.Ct. 313, 79 L.Ed. 583. See also Goodall-Sanford, Inc., v. United Textile Workers, 1 Cir., 233 F.2d It is si......
  • Request a trial to view additional results
1 books & journal articles
  • Arbitration Waiver and Prejudice.
    • United States
    • Michigan Law Review Vol. 119 No. 2, November 2020
    • 1 Noviembre 2020
    ...299 (2d Cir. 1934) (finding that a defendant was not "in default" under section 3 because the defendant was willing to arbitrate), aff'd 293 U.S. 449 (1935). But see Kulukundis Shipping Co., 126 F.2d at 989 n.39 (collecting early cases that allowed conduct-based waivers). (140.) Pre-Paid Le......

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