Itek Corp. v. McEnness

• Decision Date: 19 February 1960
• Citation: Itek Corp. v. McEnness, 164 N.E.2d 636, 340 Mass. 409 (Mass. 1960)
• Parties: ITEK CORPORATION v. Harold F. McENNESS.
• Court: Supreme Judicial Court of Massachusetts

Page 636

164 N.E.2d 636

340 Mass. 409

ITEK CORPORATION v. Harold F. McENNESS.

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Nov. 4, 1959.

Decided Feb. 19, 1960.

James M. Howe, Boston, for plaintiff.

Isadore O. Goverman, Boston (David S. Goldfine, Boston, with him), for defendant.

Before WILKINS, C. J., and SPALDING, WILLIAMS, COUNIHAN and CUTTER, JJ.

WILLIAMS, Justice.

This is a suit now prosecuted by Itek Corporation, in substitution for the original plaintiff, Vectron, Inc., to restrain the defendant from proceeding further against it in a pending action of contract until a dispute between the parties has been arbitrated, to release attachments made by trustee process in that action and to have its damages, resulting from the bringing of the action, assessed.

From admissions in the pleadings and the findings of a master it appears that an action at law was brought by the defendant against Vectron, Inc., to recover money allegedly owed him under a contract of employment as assistant to the president of the corporation. The contract was effected by a written proposal of the plaintiff on September 27, 1956, which was accepted by the defendant on the following October 11. The proposal contained detailed provisions as to regular salary, so called 'supplemental salary' based upon percentages of the net amounts received by the plaintiff 'on account of all contracts or business' for which the defendant was responsible, and the adjustment of expenses. Either party could terminate the contract by thirty days' written notice in which case the salary and supplemental salary due were payable in a prescribed manner. It was provided that: 'In event that a dispute shall arise which cannot be settled by our mutual agreement as to the meaning of this memorandum of agreement as to your employment, including what is meant by the phrase 'contracts or business for which you are responsible under this employment,' the question may be submitted by either party for determination by an arbitrator selected under the then rules of the American Arbitration Association, whose determinations shall be final and binding by [sic] both parties and be enforceable in any court of competent jurisdiction.'

The contract was terminated by the plaintiff on July 31, 1957, at which time a 'considerable amount of money' was due the defendant. On or about August 20 the plaintiff submitted to him a statement of the compensation it calculated was due him. On September 12, without making any demand for payment and without notice to the plaintiff, the defendant commenced the said action of contract in the Middlesex Superior Court by trustee writ which he caused to be served on Harvard Trust Company and Nowton-Waltham Bank & Trust Company. An attachment was made of $15,000 of the plaintiff's funds in the latter bank, which attachment was reduced in amount by the court to $7.500. The defendant's declaration alleged moneys due for salary, supplemental salary, and expenses during 1956 and 1957 in excess of $112,000. On September 13, 1957, the plaintiff notified the defendant that as a result of his action at law it had come to its attention that a dispute had arisen under the contract and that it 'elected to have said dispute submitted to arbitration according to the provisions of the said contract * * *.' It immediately took formal steps under the rules of the American Arbitration Association to submit the disputes between the parties to arbitration and requested the defendant to discontinue his action and to release any funds of the plaintiff under attachment. The defendant refused to discontinue, to release, and to submit his claims to arbitration.

In his answer the defendant denied that the matter in controversy was covered by the arbitration clause of the contract and prayed 'by way of counterclaim' that the plaintiff be restrained from 'participating' in arbitration proceedings until final disposition of this suit.

The master found that the plaintiff incurred no damages from the bringing of the action and the attachment of its bank account by the defendant except legal expenses of $2,500 in efforts to have the defendant's claim submitted to arbitration, his prosecution of the action at law restrained, and the attachment released. The defendant's exceptions to the master's report were overruled and the report confirmed. A final decree was entered dismissing the plaintiff's bill and permanently enjoining it as 'defendant in counterclaim' from 'presenting evidence, [and] participating in or taking any action whatsoever, directly or...