John E. Potter Co., Application of
| Decision Date | 06 February 1956 |
| Citation | 2 Misc.2d 515,149 N.Y.S.2d 641 |
| Parties | Application of The JOHN E. POTTER CO., Ltd., for an order restraining certain arbitration attempted to be held by MILES METAL CORPORATION before the Commercial Arbitration Tribunal of the American Arbitration Association. |
| Court | New York Supreme Court |
George J. Malinsky (George J., Malinsky and Henry C. Caron, New York City, of counsel), for petitioner John E. Potter Co., Ltd.
Telsey, Lowenthal, Rothenberg & Mason, New York City, for respondent Miles Metal Corp.
On May 13, 1955, the seller and the buyer signed a sales confirmation. The writing set forth the quantity, specifications and price, 'FOB Japan'; 'Delivery: July/August 1955 from Japan'; 'L/C [letter of credit] to be opened three banking days after we [the seller] will indicate the cost of freight'; 'shipment to Portugal will be effected by Seller for buyer's account and the rate will be indicated until May 24, 1955 for buyer's approval.' On May 23rd, by mutual consent the time for the seller to inform the buyer of the freight rate was extended to May 27th. By letter sent May 26th (but which was inadvertently misdirected and not received by the buyer until June 1st) the seller advised the buyer of the freight rate of 183.6 shillings per metric ton. On June 1st, the buyer answered that the proper rate was 110 shillings per metric ton, and that it would have to contact its customer to ascertain whether it should accept the rate stated by the seller. On June 6th, the buyer wired the seller that it understood that the cost of freight to Portugal was 130 shillings long ton and offered to book space on its own behalf if the seller could not do so. On June 7th, the seller received a letter from the Marine Midland Trust Company of New York that it was holding an application for a letter of credit in the seller's favor for approximately $65,000. 'which will be released to you [seller] as soon as the freight differences have been settled'. On that date the seller informed the buyer that as the cost of freight at the rate offered by the seller was not accepted, and, as the letter of credit was not opened for the cost of material plus the cost of shipment, as specified in the writing of May 13, 1955, 'this sale is cancelled due to the fact that you [the buyer] did not fulfill your obligations.'
The writing signed by the parties contained an arbitration clause to the effect that '[a]ny dispute or controversy arising under, out of, or in relation to or in connection with this agreement or any modification thereof shall be settled by arbitration.' In pursuance of this clause, the buyer initiated an arbitration proceeding. Presented to me for determination is the seller's application for a stay of the arbitration, or, in the alternative, that a trial by jury be had of the alleged preliminary issues as to whether or not the parties entered into an enforceable contract and whether it was duly rescinded.
The seller claims, first, that the writing containing the arbitration clause is, as a matter of law, not a binding agreement because it was conditional upon the later fixation of the cost of shipping; second, that...
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