Gregg Kendall & Associates, Inc. v. Kauhi

Decision Date19 August 1971
Docket NumberNo. 5037,5037
Citation53 Haw. 88,488 P.2d 136
CourtHawaii Supreme Court
PartiesGREGG KENDALL & ASSOCIATES, INC., Plaintiff-Appellee, v. Gilbert KAUHI, Defendant-Appellant.

Syllabus by the Court

1. In the district courts no law or rule requires the filing of written answers or motions. Oral motions and answers are as effective as any written pleading to raise the issue of arbitration properly before the district court.

2. Even though the issue of arbitration was first raised after the action had been instituted, the issue is seasonably raised under HRS § 658-5 which provides that 'if any suit or proceeding in brought upon any issue referable to arbitration under an agreement in writing' the court should stay the trial of the action if the court is 'satisfied that the issue involved in the suit or proceeding is referable to arbitration.'

3. A party is in 'default in proceeding with arbitration' when he refuses to participate in arbitration. 'Default' does not refer to a breach or default of performance of the substantive provision of the contract in which an agreement to arbitrate is a covenant.

4. The proclaimed public policy of the legislature is to encourage arbitration as a means of settling differences and thereby avoid litigation. If a claim for commission is referable to arbitration under the terms of a contract HRS § 658-5 requires the court upon the request of one of the parties to the contract to stay judicial action pending arbitration.

5. Where the circuit court did not and was not required to rule on the issue of which of two contracts was in effect, such issue ordinarily would be remanded to the trial court for its resolution. However, since no factual issues are involved and it is a question of law which must ultimately be decided by this court, in the interest of justice the issue may be determined by this court without remand.

6. Where an agent's commission may be payable under two contracts-one in which the parties merely agreed to enter into an agent-actor contract upon the happening of an event under such terms and conditions as may be mutually agreed upon and another which spells out the terms and conditions of the agreement in detail-the commission in dispute is covered by the latter contract.

Joseph A. Ryan, Honolulu, (Ryan & Ryan, Honolulu, of counsel), for defendant-appellant.

L. Richard Fried, Jr., Honolulu, (Pratt, Moore, Bortz & Case, Honolulu, of counsel), for plaintiff-appellee.

Before RICHARDSON, C. J., and MARUMOTO, ABE, LEVINSON and KOBAYASHI, JJ.

ABE, Justice.

The defendant, Gilbert Kauhi, hereinafter called the Actor, plays the role of 'Zulu' in 'Hawaii Five-O' television movie. The plaintiff, Gregg Kendall & Associates, Inc., hereinafter called the Agent, brought this action against the Actor in the District Court of Honolulu to recover the commission alleged to be due for the calendar year 1969. It is admitted by the Agent that all commissions due it from the pilot film and from the television serial that followed for the year 1968 have been paid.

In the District Court prior to the trial, the Actor interposed a demand for arbitration or failure of plaintiff to arbitrate as a defense by various oral motions. These motions were denied and after trial on the merits, the District Court entered judgment for the Agent. The Actor appealed to the Circuit Court of the First Circuit in Civil No. 30926.

Two days after the appeal was perfected in the Circuit Court, the Actor on May 20, 1970 filed the 'Answer and Counterclaim' with a demand for a jury trial. On May 27, 1970, the Actor also filed in the Circuit Court an 'Application for Order' to proceed with arbitration pursuant to HRS § 658-3, Civil No. 31027. The appeal, Civil No. 30926, and Civil No. 31027 were consolidated for a hearing. After a hearing, the Circuit Court denied the Actor's motion for stay filed in Civil No. 30926 and his application for order to compel arbitration in Civil No. 31027 on the grounds that the Actor had waived his right to arbitration and also that arbitration was not the sole remedy.

The Actor requested leave for an interlocutory appeal from the Circuit Court's rulings. This was denied and the parties proceeded with the trial on the merits of the case. During the trial, it was shown that the Agent required any person using its services in seeking employment in movies to sign an agreement 1 designating it as his agent before he was permitted to read lines. When a person refused to sign, he was not given an opportunity to read a line, and therefore he could not get a part.

It also appears that soon after the Actor was given a role in the pilot film and had signed a contract with the producer, he and the Agent signed a two-paragraph agreement (called Rider Contract) and attached it as a rider to the contract signed by the producer and the Actor.

Thereafter, when a decision was reached to continue the Hawaii Five-O pilot film as a television serial, on March 22, 1968, the parties to this action executed a printed formal document called the 'agency Contract.' It was this Agency Contract that contained the arbitration provision.

When both of the parties rested in the Circuit Court trial, the record showed the facts above recited plus the admission of the Agent that it was only entitled to one 10 per cent commission under the Rider Contract or the Agency Contract. Based on the record, the Agent's attorney moved for a directed verdict. The Circuit Court having ruled prior to the trial that the Actor had waived his right to arbitration, it became immaterial to decide whether the commission claimed to be owing was payable under the Rider Contract, or the Agency Contract, and the judge directed a verdict for the Agent. The judgment was entered accordingly and the Actor appealed.

I.

The Actor contends that prior to the trial of the case in the District Court, he made various oral motions alleging the need for arbitration as a defense as well as requesting the stay of the trial pending arbitration. The Agent admits that arbitration was made an issue in the District Court prior to the trial of the merits. However, the Agent argues that:

'(T)he Defendant (Actor) not only failed to file written pleadings or motions in response to Plaintiff's complaint in the District Court, but allowed the suit to proceed to judgment prior to filing any written claim that it was entitled to arbitration. Such conduct is totally inconsistent with any notion that Defendant treated the arbitration provision as being in effect or that it intended to avail itself of the provision, and resulted in great expense and prejudice to Plaintiff. Under these circumstances, the Circuit Court was clearly justified in concluding that Defendant had lost any right to arbitration of the dispute which he might have had.'

The Agent, while admitting that the Actor raised the issue of arbitration by oral motion and answer, seems to question the sufficiency of such oral motions and answers. It is correct, as the agent argues, that there is no law or rule to prevent the Actor from filing a written answer or motion. On the other hand, in the district courts no law or rule requires the filing of written answers or motions, and oral motions and answers are considered to be sufficient. Therefore, the oral motions and answers were as effective as any written pleading and the issue of arbitration was properly before the District Court.

The Agent also argues that the issue of arbitration was not seasonably raised because it was not made an issue until after the action had been instituted in the District Court. The provision of HRS § 658-5 is crystal clear and provides that 'if any suit or proceeding is brought upon any issue referable to arbitration under an agreement in writing' the court should stay the trial of the action if the court is 'satisfied that the issue involved in the suit or proceeding is referable to arbitration.' There is no question that the Actor seasonably raised the issue of arbitration, even though the issue was first raised after the action had been instituted. Courts of other jurisdictions have also so interpreted similar statutes. Wm. Linker Co. v. Feinberg, 360 Pa. 601, 62 A.2d 839, 841 (1949); Almacenes Fernandez, S.A. v. Golodetz, 148 F.2d 625, 627, 628 (2nd Cir.1945); Haupt v. Rose, 265 N.Y. 108, 191 N.E. 853, 854 (1934). It may be correct that HRS § 658-5 applies specifically to the circuit courts, but we see no reason why a similar rule should not be applicable on the same issue in the district courts.

As it has been noted above, after the appeal had been perfected in the Circuit Court the Actor not only Filed a written answer alleging arbitration as a defense and moved for a stay of the action but also instituted a new proceeding to compel the Agent to arbitrate pursuant to HRS § 658-3. The actions taken by the Actor in the District Court and the Circuit Court clearly show that at all times he had insisted on his right to arbitration and the circuit judge erred in ruling that he had waived his right to arbitration.

II.

The Agent also argues that the Actor was in default in proceeding with the arbitration and therefore he was not entitled to stay the action under the provisions of HRS § 658-5. To support its contention, it argues that:

'Cases decided under the Federal (Arbitration) Act have used the terms 'default' and 'waiver' interchangeably in determining whether a party is entitled to a stay of trial. See, e.g., Cornell & Co. v. Barber Ross Co., 123 U.S.App.D.C. 378, 360 F.2d 512 (1966). And it has been consistently held under that Act that a trial court possesses discretion to refuse to stay an action on a contract which provides for arbitration, and to deny a motion to refer a dispute to arbitration, where the court is of the opinion that the moving party is in default in proceeding with arbitration.' (Emphasis added.)

We have no quarrel with the stated rule. However, here there is no...

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