John Thompson Beacon Windows v. Ferro, Inc., 12781.

• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)
• Writing for the Court: PRETTYMAN, FAHY and WASHINGTON, Circuit
• Citation: 232 F.2d 366
• Parties: JOHN THOMPSON BEACON WINDOWS, Ltd., Appellant, v. FERRO, Inc., Appellee.
• Docket Number: No. 12781.,12781.
• Decision Date: 29 March 1956

232 F.2d 366 (1956)

JOHN THOMPSON BEACON WINDOWS, Ltd., Appellant,
v.
FERRO, Inc., Appellee.

No. 12781.

United States Court of Appeals District of Columbia Circuit.

Argued December 9, 1955.

Decided March 29, 1956.

Mr. Scott P. Crampton, Washington, D. C., for appellant.

Mr. Bolling R. Powell, Jr., Washington, D. C., for appellee.

Before PRETTYMAN, FAHY and WASHINGTON, Circuit Judges.

FAHY, Circuit Judge.

The appeal is from an order of the District Court overruling appellant's motion to compel arbitration. The motion was made in proceedings to secure arbitration initiated by appellant's petition filed pursuant to section 4 of the Federal Arbitration Act, 61 Stat. 671 (1947), 9 U.S.C. § 4 (1952), which provides, inter alia:

"A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition

232 F.2d 367

any court of the United States which, save for such agreement, would have jurisdiction * * * of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement. * * *"

The dispute which appellant wants arbitrated concerns an alleged breach by appellee of his obligation to pay to appellant the purchase price for goods shipped by appellant to appellee under two contracts of sale. In its petition for arbitration, appellant alleged that these contracts contained arbitration clauses,¹ that it had requested appellee to submit the dispute to arbitration, and that appellee refused to do so. Appellee opposed the petition primarily on the ground that the arbitration clause was no longer in force. It contended that there had been a material breach of the contracts because of tardy delivery of the goods, and that because of this breach it had revoked the contracts in their entirety, including the arbitration clauses. Appellee admitted that it accepted the goods and had not paid the claimed purchase price, but argued that this was justified because of the new contractual arrangement under which it accepted the goods. It also alleged that appellant's breach of the original contracts resulted in substantial damage to appellee.² Another reason for denying arbitration which was suggested to the court was the possibility that appellant had been guilty of laches in requesting arbitration.³

Section 4 of the Act provides that after hearing the parties the court shall order arbitration "upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue." If the court is not so satisfied, however, it is "summarily" to try the issues upon which the petitioner's right to arbitration depends. If the party alleged to be in default demands a jury trial, "the court shall make an order referring the issue or issues to a jury in the manner provided by law for referring to a jury issues in an equity action, or may specially call a jury for that purpose." If after such a trial by court or jury the petitioner's right to arbitration is established, the court "shall make an order summarily directing the parties to proceed with the arbitration." If, on the other hand, the issues are determined adversely to the petitioner, the court shall dismiss the proceeding.

The procedure contemplated by section 4 has not yet been pursued to the extent required, and we are constrained to hold that the order appealed from is not a "final decision" within our appellate jurisdiction under the applicable statute, 62 Stat. 929 (1948), 28 U.S.C. § 1291 (1952). The District Court did not dismiss appellant's petition; its order merely overruled the motion to compel arbitration. Although the court did not state the grounds for its action, apparently the court thought it should decide whether the contract had been revoked⁴ or whether appellant's demand for arbitration was barred by laches. If no appeal had been

232 F.2d 368

taken the question of revocation or laches would have been finally determined in a trial to the court or jury, and arbitration would then have been ordered or the petition therefor dismissed. If the former the ultimate relief sought by appellant's petition would have been granted; if the latter an appeal would lie.⁵

Appellant contends that the order was a "final decision" because it was a final determination that the question of revocation was for the court.⁶ It urges that the issue of revocation of an initially valid contract is for the arbitrators under the plain wording of section 4, which reserves to the court only issues concerning "the making of the agreement for arbitration" and "the failure to comply therewith." Consequently, the argument goes, when the court declined to order arbitration on the ground that the alleged revocation raised an issue for the court it not only erred but made a "final decision" on appellant's claim that the validity of the revocation was not to be passed on by the court. Appellant urges...