Eimco Corp., Application of

Decision Date10 May 1957
PartiesMatter of the Application of The EIMCO CORPORATION for a stay of the Arbitration between Deering, Milliken & Co., Inc., and The Eimco Corporation.
CourtNew York Supreme Court

Francis J. Sypher, New York City, for petitioner, Eimco Corp.

Otterbourg, Steindler, Houston & Rosen, New York City (Aaron Rosen, Frederic P. Houston, Melvin Liebowitz, Harold Kennedy and Gordon Marshall, New York City, of counsel), for respondent Deering, Milliken & Co., Inc.

MATTHEW M. LEVY, Justice.

Pursuant to Section 1458 of the Civil Practice Act, Deering, Milliken & Co., Inc. (hereinafter referred to as 'Deering') served a notice of intention to conduct an arbitration upon The Eimco Corporation (hereinafter referred to as 'Eimco') with respect to controversies arising out of four contracts whereby Eimco agreed to purchase Saran filter fabric from Deering. Deering claims that Eimco has refused to pay invoices issued, pursuant to the contracts, for deliveries of merchandise accepted by Eimco, who has asserted certain counterclaims against Deering arising out of alleged breach of warranty. Deering claims that the contracts have arbitration clauses. Eimco seeks an order for a stay of the arbitration on the ground that it has not contracted to settle by arbitration any claimed controversies between it and Deering.

The sale and purchase were not pursuant to any formal contracts jointly executed by the parties, but were initiated by written orders on its printed form by Eimco and accepted by Deering on its own printed form. Briefly, the procedure followed was that Eimco would send Deering an order on the Eimco order form signed by its purchasing agent, one Moore. There is not reference to arbitration on the Eimco order form. Deering would then send Eimco the Deering sales form in duplicate. One of these documents was titled 'Confirmation of Order', which Deering requested Eimco to sign on the bottom thereof for acceptance and return. The other was marked 'Acceptance of Order' and was signed by Deering's selling agent, to be retained by Eimco. In the case of three of the sales, Moore of Eimco signed and returned the 'Confirmation of Order', while as regards the fourth it appears that it was signed by Moore but filed in Eimco's office and never returned to Deering. The Deering forms contained clauses on the face thereof which referred, either on the face or reverse side, to other conditions and terms. The three confirmation orders denominated as Numbers '5142', 'SW 2165' and '5155' contained an arbitration clause on the reverse side thereof. Such a clause was contained on the front of confirmation order No. '5853'.

The agreements as to the sale of the fabrics are not in dispute and the deliveries thereunder are not. But Eimco contends that the contracts entered into between the parties do not provide for arbitration and that there was no meeting of the minds beween the parties as to the printed matter on the face or the reverse side of Deering's confirmation orders, which include the provision for arbitration. Eimco also contends that in three of the four alleged contracts (all but No. 5853) the purported arbitration clause applies to a type of goods different from that sold, and that, as to the fourth alleged contract, if it is a contract requiring arbitration, certain conditions of the arbitration clause have not been met by Deering. Eimco urges, further, that the alleged contracts were not signed by any representative of Eimco having authority to bind Eimco to arbitration and that in any case Deering is not the property party to demand arbitration.

The notice to arbitrate, served pursuant to Section 1458 of the Civil Practice Act, is entitled 'General Arbitration Council of the Textile Industry. In the Matter of the Arbitration between Deering, Milliken & Co., Inc., and The Eimco Corporation'. Notice was therein given to Eimco by Deering that 'the undersigned intends' 'to conduct an arbitration with respect to controversies arising out of said contracts'. The notice was signed by the 'Attorneys for Deering, Milliken & Co., Inc.' The first question to be considered is whether Deering has standing to demand arbitration, assuming that there were undisputed contracts specifically providing for arbitration of disputes. It appears that Deering's 'acceptance of order' forms and its 'confirmation of order' forms, describe Deering 'as agent for' a named company, and Deering's 'acceptance of order' forms contain the printed legend, 'Accepted Deering, Milliken & Co., selling agent'. It is to be noted that, in the notice to arbitrate signed on Deering's behalf, no reference was made to either of Deering's principals named in the alleged contracts, and, indeed, that the notice was not signed by Deering 'as agent'. May Deering, on its own, so proceed? Eimco does not claim that Deering was not authorized by its respective principals to enter into the contracts for the sale of the merchandise here involved, but asserts that in an arbitration proceeding with Deering as an adverse party rather than Deering's respective principals, Eimco cannot adequately protect its interests in regard to defenses or counterclaims. No cases have been cited in the briefs of counsel, from the point of view either of precedent or argument. I have sought guidance, therefore, by way of independent research--both in the area of the law of arbitration and of the law of agency, but I must confess that I was able to find little of definitive help. My conclusion, however, reached after some consideration, is definite--and that is, that, on the present submission, without more, Eimco's objection must be sustained, and, as I see it, on the ground that an award in arbitration between Deering and Eimco would not necessarily be binding upon Deering's principals, and that to compel Eimco to submit to such an arbitration would not dispose of the controversies arising under the contracts.

Where an agent acts within the scope of his authority, and, on behalf of a disclosed and specifically designated principal, enters into a contract with a third party, there is a presumption that the agent does not intend to bind himself personally to the contract, and that the principal, not the agent, is a party to the contract (Hall v. Lauderdale, 46 N.Y. 70, 75; Restatement, Agency, sec. 320; 1 Mechem on Agency, 2d Ed., secs. 1167, 1168). It may be that, in the case at bar, Deering is the real party in interest (Civ.Prac.Act, § 210) or is possessed of 'such a general agency as authorized them [Deering] to act in all matters affecting the contract for and on behalf of the mill [the principal], and even to bring and maintain an action in their own name for the benefit of the mill.' Watts v. Phillips-Jones Corp., 211 App.Div. 523, 529, 207 N.Y.S. 493, 498, affirmed 242 N.Y. 557, 152 N.E. 423. But that does not appear from the papers before me. On the contrary, among the provisions on the reverse side of Deering's own forms, I note the notices with respect to the contract are required to be sent to the seller in care of its agent, Deering, or to such address as the seller or its agent may designate. To me, this emphasizes that Deering has not shown that it has, as a matter of law, the power of a general agent over all incidents of these transactions. Since Deering, quite clearly, was an agent in the dealings between the parties, I hold that the conceded authority in Deering to make the sales for the named principals does not, as a matter of law, imply authority in Deering to compel performance by process in its own name as principal--and the service of a notice of arbitrate is the recognized process for the commencement of this type of special proceeding (See Matter of Katz [Burkin], 1 Misc.2d 67, 69-70, 146 N.Y.S.2d 332, 334-335). Nor can I, under the facts so far presented, imply authority in a 'selling agent' to institute arbitration proceedings against the buyer who has failed to make payment for the goods purchased or who has laid claim for breach of warranty with respect to them. It may be that the custom and usage of this industry imply or accord power to such an agent so to proceed, but that is not here established.

On the other hand, I find no precedent to the effect that, an agent, authorized to conduct arbitration proceedings on behalf of his principal, is, as a matter of law, an improper party to the proceedings. In his treatise on Commercial Arbitrations and Awards, at page 173, Professor Sturges says:

'General principles concerning implied authority, ratification and estoppel have been applied in these cases as in other cases involving the powers of agents and other representatives generally. If A participates in an arbitral hearing without objection to the authority of B, who acted in his behalf in submitting the cause, A will be concluded and bound by the award. He will be said to have waived the question of B's authority to act.'

The key here is 'knowledge' of the pendency of the arbitration proceeding--either by way of advance authority to the agent of one kind or another to institute it or later cognizance by the principal of the process so as to be bound by the determination (Watts v. Phillips-Jones Corp., 211 App.Div. 523, 529, 207 N.Y.S. 493, 498, affirmed 242 N.Y. 557, 152 N.E. 423, supra; cf. Smith v. Sweeny, 35 N.Y. 291, 294).

In the circumstances, I have come to the conclusion that just as I would direct a hearing on the issue of a principal contesting the authority of his agent to make an agreement to submit to arbitration in the first instance (cf. Gantt v. Felipe Y. Carlos Hurtado & Cia Ltda., 297 N.Y. 433, 79 N.E.2d 815), infra, I shall direct a hearing to ascertain whether the agent may act as the protagonist in the arbitration proceeding sought to be commenced in pursuance of the alleged agreement to arbitrate. If Deering is then found able to proceed, the extent of...

To continue reading

Request your trial
9 cases
  • Union Oil Co. of Cal. v. Lull
    • United States
    • Supreme Court of Oregon
    • February 3, 1960
    ...have presented a jury question as to whether the printed conditions constituted a part of the contract. Application of Eimco Corporation, 1957, 6 Misc.2d 422, 163 N.Y.S.2d 273; Arthur Philip Export Corp. v. Leathertone, Inc., 1949, 275 App.Div. 102, 87 N.Y.S.2d 665; Kinsman v. Kershaw, 1875......
  • Bel-Rose Fashions, Inc. v. Braunheim
    • United States
    • United States State Supreme Court (New York)
    • November 14, 1957
    ...duly authorized as its 'collective bargaining' agent, to enter into the agreement. Cf. Matter of Eimco Corporation (Deering, Milliken & Co., Inc.), 6 Misc.2d 422, 428-429, 163 N.Y.S.2d 273, 278-279. A contention based on the alleged lack of knowledge on the petitioner's part, therefore, of ......
  • Royaloy, Inc. v. General Moving & Storage, Inc.
    • United States
    • United States State Supreme Court (New York)
    • November 28, 1959
    ...controverted would necessitate a trial to determine whether the parties agreed to arbitrate (Matter of Eimco Corp. [Deering, Milliken & Co. Inc.], 6 Misc.2d 422, 428, 163 N.Y.S.2d 273, 279). However, in the view I take of this application as a whole, the adoption of such procedure is not he......
  • Martin Fein & Co. v. Sealomatic Electronics Corp.
    • United States
    • New York City Court
    • December 11, 1967
    ...Corp. v. Bartomeo, 50 Misc.2d 1073, 272 N.Y.S.2d 507). The complaint and moving papers demonstrate the contrary. (Matter of Eimco Corp., 6 Misc.2d 422, 163 N.Y.S.2d 273.) Plaintiff is purporting to sue as agent of a disclosed principal, without showing any legal or equitable title or intere......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT