Hetherington & Berner, Inc. v. Melvin Pine & Co.

• Decision Date: 20 May 1958
• Docket Number: No. 300,Dockets 24803,301,24804.,300
• Court: U.S. Court of Appeals — Second Circuit
• Parties: HETHERINGTON & BERNER, Inc., Plaintiff-Appellee, v. MELVIN PINE & CO., Inc., Defendant-Appellant. HETHERINGTON & BERNER, Inc., Plaintiff-Appellee, v. Melvin PINE, Melvin Pine & Co., Inc., and Distributors Forwarding Service Corp., Defendants-Appellants.

256 F.2d 103 (1958)

HETHERINGTON & BERNER, Inc., Plaintiff-Appellee, v. MELVIN PINE & CO., Inc., Defendant-Appellant.

HETHERINGTON & BERNER, Inc., Plaintiff-Appellee, v. Melvin PINE, Melvin Pine & Co., Inc., and Distributors Forwarding Service Corp., Defendants-Appellants.

Nos. 300, 301, Dockets 24803, 24804.

United States Court of Appeals Second Circuit.

Argued March 7, 1958.

Decided May 20, 1958.

Leo Brown, New York City (Clarence Fried and Henry Pine, New York City, on the brief), for defendants-appellants.

Robert M. Morgenthau, New York City (L. Harrison Thayer II and Patterson, Belknap & Webb, New York City, and Baker & Daniels, Indianapolis, Ind., on the brief), for plaintiff-appellee.

Before LUMBARD, WATERMAN and MOORE, Circuit Judges.

LUMBARD, Circuit Judge.

The two principal questions are, first, whether the District Court had jurisdiction to confirm an award of arbitration in favor of plaintiff where parties of diverse citizenship agreed to arbitration to be governed by the laws of New York and later agreed to arbitrate in New York after plaintiff had brought suit in the federal court; and second, whether the award, in referring to commissions on sales not yet made and an obligation to relieve defendant of any liability to a third party, was so indefinite and uncertain that it should be set aside.

We find that the District Court did have jurisdiction to confirm the award and that the award was sufficiently definite. Accordingly, it follows that all the orders of the District Court, including its order denying remand to the state court and its discharge of the bond given by plaintiff, were proper and they are affirmed.

The dispute arose when Melvin Pine & Co., Inc. (Pine & Co.) retained $176,912.32 received by it on January 11, 1957 as agent of Hetherington & Berner, Inc. (Hetherington) for the sale of road building machinery to Brazil. Just a few days before, on December 31, 1956, the contract between the parties under which Pine & Co. had acted as the exclusive export agency for Hetherington for over seven years had terminated by reason of notice given by Hetherington pursuant to the contract. Not until January 22 did Pine & Co. disclose to Hetherington that it had the money and it refused then to turn it over, as meanwhile it had asserted certain claims against Hetherington for the first time.

Hetherington, an Indiana corporation, thereupon commenced suit on January 24, in the Southern District of New York against Pine & Co. of New York, its president, Melvin Pine, a Florida resident, and Distributors Forwarding Service Corp. of New York,¹ alleging that Pine & Co. had $176,153.40 belonging to Hetherington which it refused to pay. On that same day Judge Weinfeld signed an order temporarily restraining the defendants from disposing of any of the funds pending a hearing. On January 28, the day before the date set for the hearing, Pine & Co. filed with the American Arbitration Association a demand for arbitration of its claims against Hetherington and mailed a copy to Hetherington.

The contract under which the parties had been acting until December 31, 1956 provided:

"Any controversy or claim arising out of, or relating to this contract or the breach thereof, shall be settled by arbitration in accordance with the Rules, then obtaining, of the American Arbitration Association, and judgment upon the award rendered may be entered in any Court having jurisdiction thereof."

"This agreement shall be deemed to be made under, and shall be governed by, the laws of the State of New York in all respects."

At the January 29 hearing on Hetherington's motion for a preliminary injunction, Pine & Co. served on Hetherington a motion to compel arbitration. Judge Weinfeld continued the restraining order and adjourned the hearing to February 1. At a conference in his chambers on the adjourned date the parties reached an agreement which was signed on February 6, and filed in the District Court.

The stipulation may be summarized thus:

1. That Pine & Co. was to pay Hetherington $113,000 before 5 P.M. the next day.²

2. Pine & Co. agreed to post a bond for $35,000 in favor of Hetherington to secure repayment of any additional moneys which the arbitration might award Hetherington. Hetherington agreed to state in a letter that it would promptly pay whatever might be awarded Pine & Co.

3 and 4. Both parties agreed promptly to submit all disputes to arbitration under American Arbitration Association rules, all hearings to be held at the Association\'s offices in New York.

5 and 6. The District Court action was to await the pending arbitration, and the defendants\' time to move or answer was extended to 10 days after the award, and "When the arbitration is completed and the judgment thereon is entered the above entitled suit shall be dismissed."

7. If any party violated any provision of the stipulation, the other party or parties could apply to the District Court for the Southern District of New York for appropriate relief.

Judge Weinfeld then signed an order at the foot of the stipulation dissolving the restraining order.

Pine & Co. paid $113,000 to Hetherington and filed the required bond and the parties proceeded to arbitration. Hearings were held on March 26, 27, 29, April 10 and May 29.

The unanimous award of the arbitrators was delivered to the parties on June 21, 1957. Pine & Co. was ordered to pay Hetherington $63,912.32, the balance of the money still held by Pine & Co., together with arbitration fees paid by Hetherington, and Hetherington was ordered to pay Pine & Co. $17,981.86, leaving a balance due Hetherington of $46,627.31.

The arbitrators also passed on two other matters brought into the arbitration proceeding by Pine & Co. and now urged as making the award so "lacking in finality and definiteness" that it should be set aside under New York law, namely:

"4. Hetherington & Berner, Incorporated shall relieve Melvin Pine & Company, Incorporated from its liabilities with respect to the shipment to Ugra Ltda., Pine Order No. 1-2719 in the amounts due not exceeding the sum of $2,743.27.

* * * * *

"6. This award is rendered without prejudice to the right of Melvin Pine & Company, Incorporated to recover commissions at the rate of 10% from Hetherington & Berner, Incorporated on the following tentative orders, when and if such orders shall be accepted by Hetherington & Berner, Incorporated:

                  Pine No. 1-2848        S. A. Eugene Capucio
                           1-2846-7      M. A. Osorio
                           X-XXXX-X-X-X  Vias & Viaturas, Inc
                           1-2807        Jorge G. Butler
                           1-2756        Deburaux & Cie
                           1-2837        Alberto L. Arce
                

Furthermore Hetherington & Berner, Incorporated shall accept at present prices, on or before October 1, 1957, the foregoing tentative orders upon the completion thereof by firm letters of credit in United States funds, irrevocable for adequate periods of time to permit compliance with the terms thereof, or other assurance of payment satisfactory to Hetherington & Berner, Incorporated. Upon the furnishing of such letters of credit, or upon acceptance of other assurance of payment, Hetherington & Berner, Incorporated shall pay commissions at the rate of 10% on its net invoice price to Melvin Pine & Company, Incorporated. Hetherington & Berner, Incorporated shall promptly notify Melvin Pine & Company, Incorporated of the receipt of letters of credit or other acceptance of means of payment."

When Hetherington's attorneys found that Pine & Co. intended to move in the state court to vacate the award, Hetherington on June 28 moved in the District Court to confirm the award. Pine & Co. served on Hetherington by mail motion papers returnable in the New York Supreme Court on July 9, 1957. Hetherington then removed to the Southern District Court Pine & Co.'s state court petition to vacate. Judge Palmieri on July 18 heard both motions together with Pine & Co.'s motion to remand.

Judge Palmieri, after argument and briefs, decided at an adjourned hearing to confirm the award. At his request, Hetherington submitted an affidavit showing the status of the tentative orders referred to in paragraph 6 of the arbitrators' award, and on which Pine & Co. might become entitled to commissions.

On July 23, 1957 Judge Palmieri signed two orders. The first order in Civil Action 122-64 recited that Hetherington had "shown by affidavit that it had complied with the award by relieving Melvin Pine & Co., Inc., of its liabilities relating to said shipment to Ugra Ltd. * * * and by accepting substitute orders for Pine's tentative orders No. 1-2838, 1-2836, 1-2837 on which a total commission of $5,720.90 was owing Melvin Pine & Co., Inc. and has stated further by supplemental affidavit that no other said tentative orders set forth in paragraph 6 of the award have been completed by firm letters of credit in...