Burke County Public Schools Bd. of Ed. v. Shaver Partnership

• Decision Date: 06 May 1980
• Docket Number: No. 7925SC800,7925SC800
• Parties: BURKE COUNTY PUBLIC SCHOOLS BOARD OF EDUCATION v. The SHAVER PARTNERSHIP.
• Court: North Carolina Court of Appeals

Page 481

265 S.E.2d 481

46 N.C.App. 573

BURKE COUNTY PUBLIC SCHOOLS BOARD OF EDUCATION v. The SHAVER PARTNERSHIP.

No. 7925SC800.

Court of Appeals of North Carolina.

May 6, 1980.

Simpson, Baker, Aycock & Beyer by Dan R. Simpson and Samuel E. Aycock, Morganton, for plaintiff.

Moore & Van Allen by Jeffrey J. Davis, Charlotte, for defendant.

ROBERT M. MARTIN, Judge.

The question dispositive of this appeal is whether the contract between the parties is a transaction involving interstate commerce. The trial court found that the contract did not constitute a transaction involving commerce, but we are not bound by those findings of fact, and may look at all the evidence to determine whether in fact the evidence does show that the contract was a transaction involving commerce. Setzer v. Annas, 286 N.C. 534, 212 S.E.2d 154 (1975).

It is now well settled that if the Federal Arbitration Act, 9 U.S.C. § 2, applies to a particular contract, the act supersedes conflicting state law, notwithstanding a choice of law provision in the contract. In General Atomic Co. v. Felter, 436 U.S. 493, 98 S.Ct. 1939, 56 L.Ed.2d 480 (1978) a New Mexico State trial court judge had enjoined General Atomic Company from pursuing arbitration under the Federal Act. The Supreme Court, in applying the Federal Act to these state court proceedings, held that a state court had no power to enjoin resort to arbitration under the Federal Act.

The contract in the case sub judice contained an arbitration clause but whether the contract evidences a transaction involving commerce is seriously in question. Prima Paint Corp. v. Flood & Conklin, 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), involved a "consulting agreement" between the parties, a Maryland corporation and a New Jersey corporation. This consulting agreement was closely associated with a contract pursuant to which the plaintiff purchased the defendant's multi-state paint business and transferred the manufacturing operation from New Jersey to Maryland. The United States Supreme Court held that "(t)he consulting agreement was inextricably tied to this interstate transfer and to the continuing operations of an interstate manufacturing and wholesaling business. There could not be a clearer case of a contract evidencing a transaction in interstate commerce." Id. at 401, 87 S.Ct. at 1804-05, 18 L.Ed.2d at 1276.

Justice Fortas, writing the opinion of the Court, referred by footnote to the legislative history of the Federal Arbitration Act in response to a dissent to his opinion written by Justice Black, who argued that the language "transactions involving commerce" should be limited to "contracts between merchants for the interstate shipment of goods." As noted by Justice Fortas, ". . . the House Report on this legislation . . . proclaims that '(t)he control over interstate commerce (one of the bases for the legislation) reaches not only the actual physical interstate shipment of goods but also contracts relating to interstate commerce.' " Id. at 401-02, 87 S.Ct. at 1805, 18 L.Ed.2d at 1276 (citing H.R.Rep. No. 96, 68th Cong., 1st Sess., 1 (1924)). (Emphasis added). The point concerning this language in Justice Fortas' opinion is that, while denying Justice Black's contention that the Federal Arbitration Act should apply only to contracts between merchants for the interstate shipment of goods, it seems clearly to equate the term "interstate commerce" with the phrase "actual physical interstate shipment of goods."

Justice Fortas' argument is summarized as follows:

It would be remarkable to say that a contract for the purchase of a single can of paint may evidence a transaction in interstate commerce, but that an agreement relating to the facilitation of the purchase of an entire interstate paint business and its re-establishment and operation in another State is not.

Id. at 402, 87 S.Ct. at 1805, 18 L.Ed.2d at 1276. It is thus manifest from Prima Paint that the term "transaction involving commerce" was not thereby expanded to encompass transactions which do not involve or relate to actual physical interstate shipment of goods.

In Conley v. San Carlo Opera Company, 163 F.2d 310, (2d Cir. 1947) the plaintiff had contracted with the defendant for an option on plaintiff's services as an opera singer. A controversy arose, and the Opera Company claimed that the arbitration clause contained in the contract was governed by the Federal Arbitration Act and was therefore irrevocable. The court held that the contract did not evidence a transaction involving commerce, even though the plaintiff would be required to travel throughout the United States giving operatic performances. Thus, the act which consummated the contract was the singing and not the travel between the states.

Electric Co. v. Hospital Corp., 42 N.C.App. 351, 256 S.E.2d 529 (1979) involved a contract between an electrical contractor and the Durham County General Hospital Corporation, wherein the electrical contractor contended the Federal Arbitration Act...