Cities Service Oil Co. v. American Mineral Spirits Co.

• Decision Date: 10 August 1937
• Citation: 22 F. Supp. 373
• Parties: CITIES SERVICE OIL CO. v. AMERICAN MINERAL SPIRITS CO.
• Court: U.S. District Court — Southern District of New York

22 F. Supp. 373

CITIES SERVICE OIL CO. v. AMERICAN MINERAL SPIRITS CO.

District Court, S. D. New York.

August 10, 1937.

Hatch & Wolfe, of New York City (Carver W. Wolfe, of New York City, of counsel), for Cities Service Co.

Hill, Rivkins & Middleton, of New York City (Robert E. Hill, of New York City, of counsel), for American Mineral Spirits Co.

KNOX, District Judge.

This is a motion to confirm an arbitration award. Under date of July 3, 1936, the parties entered into a contract whereby Cities Service Oil Company chartered to American Mineral Spirits Company the tank steamer Hadnot for the transportation of fuel oil on one voyage from a safe port in the United States Gulf to a safe port north of Cape Hatteras not north nor east of New York City. On July 21, 1936, the parties agreed to extend the charter party for one additional consecutive voyage. In accord with the charter party a cargo of Spirits' No. 2 and No. 4 heating oils was carried from Corpus Christi, Tex., to Carteret, N. J. Upon discharge, discovery was made that the oil had become contaminated. Thereupon, Spirits withheld, on account of the charter hire, a sum equivalent to the loss suffered by reason of the contamination.

Although the charter party contained a provision for arbitration, Spirits suggested that the dispute could be settled more satisfactorily in the federal courts. However, Cities Service insisted on invoking clause 31 of the charter party which reads as follows:

"31. Any and all differences and disputes of whatsoever nature arising out of this charter shall be put to arbitration in the City of New York pursuant to the laws relating to arbitration there in force, before a board of three persons, consisting of one arbitrator to be appointed by the owner, one by the charterer, and one by the two so chosen. The decision of any two of the three on any point or points shall be final. Either party hereto may call for such arbitration by service upon any officer of the other, wherever he may be found, of a written notice specifying the name and address of the arbitrator chosen by the first moving party and a brief description of the disputes or differences which such party desires to put to arbitration. If the other party shall not, by notice served upon an officer of the first moving party within twenty days of the service of such first notice, appoint its arbitrator to arbitrate the dispute of differences specified, then the first moving party shall have the right without further notice to appoint a second arbitrator, who shall be a disinterested person, with precisely the same force and effect as if said second arbitrator had been appointed by the other party. In the event that the two arbitrators fail to appoint a third arbitrator within twenty days of the appointment of the second arbitrator, either arbitrator may apply to a Judge of any court of maritime jurisdiction in the city above mentioned for the appointment of a third arbitrator, and the appointment of such arbitrator by such Judge on such application shall have precisely the same force and effect as if such arbitrator had been appointed by the two arbitrators. Until such time as the arbitrators finally close the hearings either party shall have the right by written notice served on the arbitrators and on an officer of the other party to specify further disputes or differences under this charter for hearing and determination. Awards made in pursuance to this clause may include costs, including a reasonable allowance for attorney's fees, and judgment may be entered upon any award made hereunder in any court having jurisdiction in the premises."

In accordance with cause 31, each party designated an arbitrator and the designees duly chose a third. The proceedings then went forward, and, in due course, an award was rendered in favor of Spirits. On July 14, 1937, counsel for Spirits served on counsel for Cities Service papers relating to a motion in this court to confirm the award. Later on the same day, counsel for Cities Service served on Spirits' counsel an order to show cause returnable before the Supreme Court of New York county, which specified several grounds for vacating the award. Spirits opposed the relief there asked on jurisdictional grounds and, after argument, the Supreme Court justice sustained that contention, ruling as follows:

"Motion to vacate an award. The parties signed an agreement in which they provided that any proceeding to force an arbitration should be had before a court of maritime jurisdiction. This dispute arises on a maritime contract. The arbitration clause does not state (in words) to what court application for judgment is to be made. If the arbitration clause does not name the court in which application for judgment is to be made, and as (unless tacitly the Federal Court is named) no court is named, United States Arbitration Act, § 9 9 U.S.C.A. § 9, covers and provides that the application must be made to the Federal Court. The successful party has marked the jurisdiction of the Federal Court before the unsuccessful party applied here. So either the Federal Court has exclusive jurisdiction or this Court should decline jurisdiction. The motion is denied. If the moving party so elects it may enter an order referring the motion to the Federal Court."

Thereupon, in this court, Spirits brought on its motion to confirm. Cities Service opposes favorable action thereon, urging the same grounds on which it sought to set aside the award in the state court, viz.:

"1. That the arbitrators failed to take an oath as prescribed by C.P.A., § 1452, and there was no written or oral waiver of the said oath.

"2. The intended award is invalid because it was not acknowledged or proved and certified as required by C.P.A. § 1455.

"3. The intended award should be vacated as in violation of C.P.A., § 1457, subd. 1, because of the partiality of Arbitrator Stanley.

"4. The intended award should be vacated as in violation of C.P.A., § 1457, subd. 4, because Arbitrators Stanley and French exceeded their powers, or so imperfectly executed them, that the so-called award was not final and definite on the subject matter submitted.

"5. That the arbitrators' fees exceeded those allowed by C.P.A., § 1454."

Cities Service also contends that, if the arbitration laws of New York are not applicable, then under the United States Arbitration Act the award should be vacated.

The first point of difference between the parties relates to whether this court should apply to the dispute the laws of New York or of the United States. It must be confessed that the arguments predicated on clause 31 lead to a drawn battle. Cities Service stresses the first sentence of clause 31 which states that "any and all differences * * * shall be put to arbitration in the City of New York pursuant to the laws relating to arbitration there in force. * * *" It argues that this sentence must refer to the law of New York. Spirits, however, points out that the federal act is likewise in force in New York City, and I cannot assert that the aforequoted sentence is anything but equivocal. The same must be said of the fifth sentence of clause 21, which Spirits contends clearly refers to the federal law. That sentence provides that, if the two designees of the parties fail to agree on a third arbitrator, either one "may apply to a Judge of any court of maritime jurisdiction in the city above mentioned * * *" Spirits argues that the fifth sentence qualifies the first sentence; that clause 31 invokes the laws relating to arbitration in a court of maritime jurisdiction in the city of New York; that a "court of maritime jurisdiction" means only a federal court; and, therefore, that clause 31 refers to the arbitration law in...