Joseph L. Wilmotte & Co. v. Rosenman Bros.
| Decision Date | 19 October 1977 |
| Docket Number | No. 2-58870,2-58870 |
| Citation | 258 N.W.2d 317 |
| Parties | JOSEPH L. WILMOTTE & CO., Appellee, v. ROSENMAN BROS., a/k/a Rosenman Brothers, Schwartz Enterprises, Inc., d/b/a Rosenman Bros., Appellant. |
| Court | Iowa Supreme Court |
Bailey C. Webber, Ottumwa, for appellant.
Barnes, Schlegel & Walter, Ottumwa, for appellee.
Heard by MOORE, C. J., and MASON, LeGRAND, REES and UHLENHOPP, JJ.
This is an appeal from the order and decree of the District Court of Wapello County, establishing and confirming a judgment in favor of plaintiff and against defendant entered by a Division of the Supreme Court of the State of New York, which judgment was based on an arbitration award against the defendant. We find no reversible error and affirm the trial court.
In August of 1968 the defendant, Schwartz Enterprises, Inc., d/b/a Rosenman Bros., placed an order for steel products with Edgar A. Baer, a steel broker of New Orleans. Baer, in turn, placed the order with plaintiff, a New York corporation. Acknowledgments of the order were sent by plaintiff to the defendant at defendant's Ottumwa, Iowa, address, and in due course the acknowledgments of the order with the confirmation of defendant by and through defendant's agent, L. J. Lynn, were returned to plaintiff. The record discloses Lynn was at all material times an employee of the defendant and was authorized to execute the confirmations of the orders.
In all, five acknowledgment documents were sent to the defendant from plaintiff, all of which were signed by Lynn and returned. On the top of the front of each of the acknowledgment documents the following language appeared: "We thank you for your above-mentioned order, placed with us through Edgar A. Baer, and are pleased to confirm having booked for your account, subject to the following conditions of sales shown on the reverse side, the following material." (italics ours). Then follows a description of certain elements of the material ordered. On the reverse side referred to there were 11 general conditions of sale, and paragraph 10 reads as follows: "Any controversy or claim arising out of or related to this order and its acceptance shall be settled by arbitration in accordance with the rules, then obtaining, of the American Arbitration Association; and judgment may be entered upon the award rendered in the highest court of the forum, State or Federal."
Shipment of the several elements of the orders under the contracts of sale was made in due course to the defendant's yards in Ottumwa, and after delivery of the several shipments defendant claimed certain portions of the material received at its yard were unacceptable and as a result only partial payment for the steel was made. Plaintiff disputed the contention that the material was unacceptable and demanded full payment for the steel.
On August 20, 1970 plaintiff filed a demand for arbitration with the American Arbitration Association (hereinafter AAA). In its demand plaintiff requested that the locale for arbitration be in New York City. A copy of the demand was sent to the defendant at Ottumwa, and on September 11, 1970 the defendant filed an answer to plaintiff's demand for arbitration, claiming that partial payment was in fact made and that there were deficiencies or defects in the materials delivered, and requested that Ottumwa be fixed as the locale for the arbitration hearing.
It is true that the acknowledgments of sale upon which defendant's confirmations by and through its agent Lynn appeared did not fix the locale for arbitration hearing. However, according to the terms of said documents, paragraph 10 of the conditions of sale provided that the rules of the AAA were to govern any arbitration of any dispute under the contract. The commercial arbitration rules of the AAA were admitted into the record on the trial of this case by stipulation of the parties and § 10 of said rules provides:
There was no agreement between the parties as to the locale for arbitration, and the AAA, pursuant to its powers under § 10 of its rules, fixed New York City as the locale for arbitration, and rejected defendant's request that the arbitration be had in Ottumwa.
On January 25, 1971 defendant filed with the AAA an instrument designated "withdrawal from arbitration" and thereafter did not participate in the arbitration proceedings. The proceedings on the dispute continued without defendant's participation in accordance with rule 29 of the Commercial Arbitration Rules which provides that unless the law provides to the contrary, the arbitration could proceed in the absence of any party who after due notice failed to be present or failed to obtain an adjournment. Arbitrators were chosen and a hearing on the dispute was held in accordance with AAA rules. On June 28, 1971 the arbitrators made an award to the plaintiff in the amount of $9,388.50 plus costs.
Following the award, the plaintiff instituted its action in a division of the Supreme Court of the State of New York and prayed that the court enforce the arbitration award that was made in its favor. Under § 39b of the AAA rules service of notice of or process in any arbitration proceedings or court action related thereto under the agreement for arbitration could be served by mail. The New York court directed that service of notice of the judicial proceedings be made by registered mail to the defendant which, in fact, was done. The defendant did not participate in the proceedings in the Supreme Court of New York and on September 30, 1971 judgment was entered by the New York court in favor of the plaintiff and against defendant on the arbitration award.
Suit was then instituted in the District Court of Wapello County, Iowa, for the establishment of the New York judgment as an enforceable judgment in Iowa. Defendant answered, denying any liability under the arbitration award or the New York judgment, and claimed that since the contracts between plaintiff and defendant for the purchase of the steel were Iowa contracts, Iowa law applied and that the agreements to arbitrate were invalid since they did not comply with § 679.2 of the Code or that defendant's withdrawal from arbitration made the agreements to arbitrate a nullity since under Iowa common law a party to an arbitration agreement can withdraw at any time from an arbitration proceedings prior to the granting of an award. Also, defendant claimed that the arbitration agreement could not be enforced since the defendant had not agreed to it, contending that it had not expressly agreed to arbitrate and that the agent, Lynn, who had signed the contract for the defendant did not have the authority to enter into an arbitration agreement which would be binding on the defendant.
Defendant further contended by way of resistance to plaintiff's petition in the trial court that the defendant, through its board of directors, did not expressly agree to submit all of the disputes under the five contracts to arbitration and that the courts of the State of New York did not acquire in personam jurisdiction over the defendant since there was no physical presence in New York, the defendant never was engaged in business in New York and never expressly consented to be under the jurisdiction of the New York courts. While the formal introduction of the pertinent documents had been stipulated to by the parties, they were all objected to by the defendant at the time of their introduction based upon all of the defendant's contentions detailed above.
Defendant's objections to the evidence were overruled by the court, as was defendant's motion to dismiss. Trial court found defendant had consented to the provision for arbitration on the reverse of the acknowledgment and confirmation documents, and that defendant's agent, Lynn, was authorized to sign the documents. As the result of such acceptance, the trial court found the defendant had consented to the jurisdiction of the New York court by its agreement to arbitrate in the place chosen by the AAA if the parties had not agreed on the locale for arbitration. In the light of such findings, the trial court held the final judgment of the New York court was valid and binding on the defendant, and that plaintiff was entitled to judgment in its favor for the amount of the arbitration award with interest and costs as confirmed by the New York court.
Defendant states the following issues for review which it contends necessitate a reversal of this case:
(1) The trial court erred when it overruled objections to the admission of documentary evidence of an arbitration clause, an arbitration award based thereon, and the New York judgment based on the arbitration award on the grounds that since they were Iowa contracts, Iowa law would be applied to determine their validity and would invalidate the arbitration clauses contained in the contracts since either the arbitration clauses were not made in compliance with § 679.2, The Code, since they were not acknowledged by the defendant or were not in the particular form as required by the cited section; or, since the defendant withdrew from the arbitration proceedings before an award was made, no arbitration award granted after defendant's withdrawal could be enforced under Iowa common law.
(2) The trial court erred in admitting into evidence over defendant's objections the printed provisions relating to arbitration appearing on the reverse side of the...
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...contract was entered into, Iowa law rendered executory arbitration agreements generally unenforceable. Joseph L. Wilmotte & Co. v. Rosenman Bros., 258 N.W.2d 317, 325 (Iowa 1977). Iowa law also provides that municipalities are without power to make contracts that are inconsistent with state......
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