Kirschner v. West Company, Civ. A. No. 27579.

Decision Date20 April 1960
Docket NumberCiv. A. No. 27579.
PartiesLeon KIRSCHNER and Henry Naftulin, individually and as co-partners, trading as K-N Enterprises v. WEST COMPANY.
CourtU.S. District Court — Eastern District of Pennsylvania

Stephen D. Rudman (of Weissman & Kozart), Philadelphia, Pa., for plaintiffs.

Theodore Voorhees and John T. Subak, Philadelphia, Pa., for defendant.

GOODRICH, Circuit Judge.

Plaintiffs in this case have brought an action against the defendant for breach of contract. Federal jurisdiction is based on diversity of citizenship. The defendant has filed a motion to stay proceedings pending the arbitration provided for in paragraph 15 of the 1952 agreement between the parties.1 The plaintiffs oppose this motion. They say that this Court cannot stay the proceedings pending arbitration because Illinois law, which they assert will not permit such a stay, governs this case, the Federal Arbitration Act being inapplicable. They also contend that defendant is in "default" in proceeding with the arbitration.

It is now settled that, in spite of the broad language of Section 3 of the Federal Arbitration Act,2 its compulsory effect is applicable only to those contracts covered by Section 2 of the Act,3 i. e., "any maritime transaction or a contract evidencing a transaction involving commerce." Bernhardt v. Polygraphic Co., 1956, 350 U.S. 198, 201-202, 76 S.Ct. 273, 275-276, 100 L.Ed. 199.

The contract in this case has nothing to do with any maritime transaction. It is a contract by which the plaintiffs grant a license to the defendant "to make, use and apply the coating material covered by this agreement as hereinafter set forth, for use in connection with rubber or synthetic closures, which are to be used for the pharmaceutical industry, and for no other purpose." Is this a contract "evidencing a transaction involving commerce?" By "commerce," of course, is meant the type of commerce within federal jurisdiction, i. e., interstate or foreign commerce.4

The defendant says that it "produces bottle closures which are shipped, sold, and used throughout the entire United States." This assertion does not establish the fact and we must go back to the words of the contract. The contract does provide a license for the use of the material in the "pharmaceutical industry." We may take judicial notice of the fact that the pharmaceutical industry covers the entire United States. This, therefore, is a contract which provides for the supplying of material to an industry which is country-wide. This type of contract evidences a transaction involving "commerce" as that term is now defined by the Supreme Court.5 The citation of cases involving a concept of "commerce" prevalent in the days of Hammer v. Dagenhart, 1918, 247 U.S. 251, 38 S. Ct. 529, 62 L.Ed. 1101, does not help us on this problem at the present time.

There is no merit to the plaintiff's last point. The motion for stay was made within a reasonable time after the complaint was filed and we do not think there is any basis for saying that any rights which the defendant had were waived.

The motion will be granted.

1 Paragraph 15 of the contract reads in part as follows:

"It is understood and agreed that in the event a dispute arises between the parties hereto from, out of, or concerning the meaning, construction, interpretation, performance, non-performance or breach of this agreement, the same shall be submitted to arbitration in the County of Cook, City of Chicago and State of Illinois, pursuant to the Arbitration Laws of the State of Illinois, and the then rules of the American Arbitration Association and any award upon such arbitration shall be enforceable in any Court of competent jurisdiction."

2 "§ 3. Stay of proceedings where issue therein referable to arbitration

"If any suit or proceeding be...

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6 cases
  • Mitsubishi Shoji Kaisha Ltd. v. MS GALINI
    • United States
    • U.S. District Court — Southern District of Texas
    • February 22, 1971
    ...of one of the parties. The language of Section 3, where made applicable by the terms of Section 2, is compulsory. Kirschner v. West Company, 185 F.Supp. 317 (E.D.Pa.1960), appeal dism. 300 F. 2d 133 (3rd Cir. 1962). In the cases cited by plaintiff, there was no compelling congressional mand......
  • Kirschner v. West Company, 13272.
    • United States
    • U.S. Court of Appeals — Third Circuit
    • February 23, 1962
    ...of Illinois; defendant is a Pennsylvania corporation. 2 9 U.S.C. §§ 1-14. 3 The opinion of the District Court is reported at 185 F.Supp. 317 (E.D.Pa. 1960). 4 McKenna Process Company of Illinois v. Blatchford Corporation, 304 Ill.App. 101, 25 N.E.2d 916 (1940), citing Cocalis v. Nazlides, 3......
  • Touton, S.A. v. M.V. Rizcun Trader
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • April 24, 1998
    ...parties have agreed to arbitration, therefore, the issuance of a stay is mandatory except in the case of default. Kirschner v. West Company, 185 F.Supp. 317, 319 (E.D.Pa.1960); see, also, Campeau Corp. v. May Department Stores Co., 723 F.Supp. 224, 226-7 (S.D.N.Y.1989). "Default" here is co......
  • Kirschner v. West Company
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • January 15, 1965
    ...the parties. The stay was granted by the late Circuit Judge Goodrich, sitting specially as a district court judge. Kirschner v. West Co., 185 F.Supp. 317 (E.D.Pa.1960). Since the order granting the stay was interlocutory, an appeal therefrom was dismissed. Kirschner v. West Co., 300 F.2d 13......
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