Bunge Corp. v. Williams

• Decision Date: 18 January 1977
• Docket Number: Gen. No. 76--135
• Citation: 4 Ill.Dec. 11,359 N.E.2d 844,45 Ill.App.3d 359
• Parties: , 4 Ill.Dec. 11, 21 UCC Rep.Serv. 436 BUNGE CORPORATION, a corporation, Plaintiff-Appellee, v. Marion WILLIAMS et al., Defendants-Appellants.
• Court: United States Appellate Court of Illinois

Page 844

359 N.E.2d 844

45 Ill.App.3d 359, 4 Ill.Dec. 11, 21

UCC Rep.Serv. 436

BUNGE CORPORATION, a corporation, Plaintiff-Appellee, v. Marion WILLIAMS et al., Defendants-Appellants.

Gen. No. 76--135.

Appellate Court of Illinois, Fifth District.

Jan. 18, 1977.

R. Corydon Finch, Anna, for defendants-appellants.

James H. Smith, Hale & Smith, Shawneetown, for plaintiff-appellee; Linda Wolff, New York City, of counsel.

KARNS, Justice:

Defendants Marion Williams, Donald Farris and Gene Powless appeal from orders of the Circuit Court of Alexander County that they proceed with arbitration in accordance with provisions in three separate written contracts with plaintiff-appellee Bunge Corporation. The three cases, which are identical for all relevant intents and purposes, have been consolidated on appeal.

In July 1972, Bunge Corporation, which operates a grain elevator at Cairo, entered into soybean purchase contracts with defendants, all of whom are farmers in Alexander County. Defendants failed to deliver the soybeans and refused to pay Bunge the damages it sought for breach of contract. Bunge then instituted arbitration proceedings. Defendants refused to arbitrate, whereupon Bunge instituted the instant actions to compel arbitration under Section 2(a) of the Uniform Arbitration Act, as amended (Ill.Rev.Stat.1973, ch. 10, par. 102(a)). After a hearing, the court made the statutorily required determination that the parties had entered into binding agreements to arbitrate, and ordered the defendants to take the steps necessary to proceed with arbitration.

Defendants have raised a number of issues here, ¹ but the dispositive question is, simply stated, whether there were in fact binding agreements to arbitrate between Bunge Corporation and the defendants. We agree with the court below that there were, and therefore affirm.

The relevant portions of the governing statute provide that:

'(a) On application of a party showing an agreement described in Section 1 (a written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties), and the opposing party's refusal to arbitrate, the court shall order the parties to proceed with arbitration, but if the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised and shall order arbitration if found for the moving party, otherwise, the application shall be denied.

'(e) An order for arbitration shall not be refused on the ground that the claim in issue lacks merit or bona fides or because any fault of grounds for the claim sought to be arbitrated have not been shown.' (Ill.Rev.Stat.1973, ch. 10, par. 102(a) and (e).)

The statutory language could hardly be any clearer. As the Appellate Court for the Second District wrote in School Dist. No. 46 v. Del Bianco, 68 Ill.App.2d 145, 215 N.E.2d 25 (2d Dist.1966), it is a 'simple formula':

'* * * The sole issue under the Act on the preliminary hearings to compel or stay arbitration, is whether there is an agreement to arbitrate. If so, the Court should order arbitration; if not, arbitration should be refused. * * *

'* * * (T)he basic intent of the Act is to discourage litigation and foster the voluntary resolution of disputes in a forum created, controlled and administered by the agreement to arbitrate. * * *

'The Uniform Act contemplates that arbitrators will be men who understand the terminology, practices, customs and usages of the trade, business or profession involved in the dispute--men, who can bring knowledge, expertise and understanding to the solution of the controversy. It encourages the self adjustment of minor disputes, subject to court supervision, with due recognition of the right to present material evidence, to cross examine witnesses, to have the aid of counsel, and to all procedural safe-guards of an orderly hearing, including notice. It vests in the arbitrators power to subpoena witnesses and records, administer oaths, and to permit the taking of evidence depositions in a proper case. Ill.Rev.Stat.1963, Chap. 10, pars. 105, 106 and 107. It was designed to meet the dynamic commercialism of today. * * *

'When the plaintiff and defendant executed the contract in question, containing the aforesaid arbitration clause, the Uniform Act was in force in Illinois, and it was deemed a part of the contract the same as though expressly incorporated therein. Schiro v. W. E. Gould & Co., 18 Ill.2d 538, 544, 165 N.E.2d 286 (1960). The parties were then irrevocably committed to arbitrate 'all questions in dispute under this agreement'. (Ill.Rev.Stat.1963, Chap. 10, par. 101.)' (68 Ill.App.2d at 156--57, 215 N.E.2d at 31.)

The contracts out of which the instant disputes arose each provided in plain English that the buyer and the sellers agreed 'that all disputes and controversies between them with respect to this contract shall be arbitrated' according to the rules and regulations of the National Grain and Feed Association. (Emphasis added.) This is clearly not a case such as Flood v. Country Mutual Insurance Co., 41 Ill.2d 91, 242 N.E.2d 149 (1968), where there was an unresolved question for the court as to what issues were subject to arbitration, requiring a preliminary interpretation by the court of the parties' arbitration agreement. (Cf. Borg, Inc. v. Morris Middle School Dist. No. 54, 3 Ill.App.3d 913, 278 N.E.2d 818 (3d Dist.1972).) Thus the trial court properly saw the judicial function in these cases as limited to a summary determination of the question whether there were agreements to arbitrate. Under the statute, the court was not to consider the merits of the underlying disputes, and it did not, nor will we. (See Historical and Practice Notes, Ill.Ann.Stat., ch. 10, par. 102 (Smith-Hurd 1973).) If, after arbitration, the defendants find fault with the award of the arbitrators, they may then, under the Act, apply to vacate the award on the grounds stated in Section 12, seek modification or correction under Section 13, or appeal, as in any civil case, under Section 18. (Ill.Rev.Stat.1973, ch. 10, pars. 112, 113, and 118.)

Defendants argue that they did not consent to arbitration because Bunge's agent did not call their attention to the arbitration provisions on the reverse of the contracts which they signed. They claim that they never read the provisions, that they had never even heard of arbitration, and that they did not intend by signing the contracts to agree to arbitration. They vehemently maintain that the design of the contracts was fraudulent, and that the provisions for arbitration were unconscionable within the meaning of Section 2--302 of the Uniform Commercial Code (Ill.Rev.Stat.1973, ch. 26, par. 2--302). They conclude that the National Grain and Feed Association has no jurisdiction to proceed with arbitration of the disputes because of their lack of consent.

Section 1 of the Uniform Arbitration Act provides that arbitration provisions in written contracts such as those involved here are 'valid, enforceable and irrevocable save upon such grounds as exist at law or in equity for the revocation of any contract.' (Ill.Rev.Stat.1973, ch. 10, par. 101.) Section 2--302(1) of the Uniform Commercial Code permits a court in its discretion, upon finding as a matter of law that any clause of a contract was unconscionable at the time it was made, either to 'refuse to enforce the contract, or * * * enforce the remainder of the contract without the unconscionable clause, or * * * so limit the application of any unconscionable clause as to avoid any unconscionable result.' (Ill.Rev.Stat.1973, ch. 26 par. 2--302(1).)

The form of contract executed by each defendant in the transactions at issue, a sample of which is included in the record on appeal, is a 'snap-out' form. The contract packet contains four sheets separated by carbon paper. The bottom sheet, which is visibly different from the three sheets above it, is designed to serve both as a permanent record of deliveries made against the contract and as an envelope for related papers. The first three sheets,...