Knickerbocker Ins. Co. v. Gilbert

Decision Date07 July 1970
PartiesApplication of KNICKERBOCKER INSURANCE COMPANY, Petitioner-Appellant, For an Order Staying the Arbitration Commenced by Thelma GILBERT, Respondent-Respondent.
CourtNew York Supreme Court — Appellate Division

Arnold Davis, New York City, of counsel (Guminick & Lieber, New York City, attorneys) for petitioner-appellant.

Philip Myer, New York City, for respondent-respondent.

Before STEVENS, P.J., and EAGER, CAPOZZOLI, NUNEZ and BASTOW, JJ.

NUNEZ, Justice.

This appeal raises the question of the timely service of appellant's application for a stay of arbitration.

It is undisputed that a notice of intention to arbitrate, conforming to the provisions of CPLR 7503(c), was served on petitioner on December 1, 1969. The petition to stay arbitration was sent by certified mail on December 11, 1969 and was received by respondent's attorney on December 12 1969.

We do not reach the question as to whether service upon claimant's attorney, if timely made, is effective to commence a proceeding to stay arbitration, since we conclude that such service was not timely made in the instant case. It should be noted that there is a divergence of opinion as to the effectiveness of service on an attorney, the Fourth Department holding in Matter of Bauer (MVAIC), 31 A.D.2d 239, 296 N.Y.S.2d 675, that such service is proper, and the Second Department reaching a contrary conclusion in Matter of State-Wide Ins. Co. (Lopez), 30 A.D.2d 694, 291 N.Y.S.2d 928.

CPLR 7503(c) provides, in part:

'An application to stay arbitration must be made by the party served within ten days after service upon him of the notice or he shall be so precluded. Notice of such application shall be served in the same manner as a summons or by registered or certified mail, return receipt requested.'

It should be noted that the provision for the manner of service of notice of application to stay arbitration repeats the exact language in the sentence of CPLR 7503(c) just preceding the one above quoted, with regard to service of the notice of intention to arbitrate.

The legislative history as to the provisions for service of notice of intention to arbitrate and petition to stay arbitration is significant in construing those provisions. The original tentative draft provision provided for service in the same manner as a summons (4 N.Y.Adv.Comm.Rep. 80--81). Service by registered or certified mail, return receipt requested, was added at the suggestion of a number of bar associations to conform with actual practice (5 N.Y.Adv.Comm.Rep. A 241). In Monarch Insurance Company v. Pollack, 32 A.D.2d 819, 820, 302 N.Y.S.2d 432, 435, the Court stated, with regard to this change:

'The implication is that practitioners in the arbitration field had satisfied themselves of the efficacy of service by registered or certified mail and of the conclusory nature of the signed and dated receipt which fixes the time of actual delivery of the notice of intention to arbitrate.'

Thus it was held in Monarch Insurance Company, supra, and by this Court in Cosmopolitan Mutual Insurance Company v. Moliere, 31 A.D.2d 924, 298 N.Y.S.2d 561 that the 10 day period to make an application for a stay of arbitration commences to run from the date of Actual service of the notice of intention and not from the time of mailing. Apart from other reasons, discussed hereinafter, it must be presumed that where the Legislature used the same language as to service of a petition to stay arbitration and as to service of a notice of intention to arbitrate the same construction must be given to that language. Thus it is not the mailing but the receipt of the papers which constitutes service.

Several cases construing the language of section 330 of the Election Law which provides that proceedings under that section be instituted within a certain number of days, are strikingly analogous to the case at bar. In Matter of King v. Cohen, 293 N.Y. 435, 439, 57 N.E.2d 748, 750, it was held that the statute 'calls for delivery of the instrument of notice not later than on the last day on which the proceeding may be commenced'. It was held that the notice, although timely mailed, was insufficient since it was not received until after the last day. The Court said (p. 439, 57 N.E.2d p. 750): 'In this connection, we are moved to remark that the use of registered mail is likely to result in a failure of timely delivery of the notice of the proceeding.' See also to the same effect this Court's decision in Matter of Weiser v. Power, 29 A.D.2d 640, 286 N.Y.S.2d 709.

The petition to stay arbitration instituted the 'special proceeding' authorized by CPLR 7502 (subd. (a)) since it was the first application arising out of the controvery brought before the Court (Matter of Jonathan Logan, Inc. (Stillwater Worsted Mills), 31 A.D.2d 208, 209, 295 N.Y.S.2d 853, 855, affd. 24 N.Y.2d 898, 301 N.Y.S.2d 636, 249 N.E.2d 477). The method for commencing a special proceeding is provided for in CPLR 304:

'A special proceeding is commenced and jurisdiction acquired by service of a notice of petition or order to show cause.'

Service to commence a proceeding is different from service by mailing after a proceeding is commenced (see Monarch Insurance Company v. Pollack, Supra, 32 A.D.2d 819, 302 N.Y.S.2d 432). CPLR 7503(c) does not provide simply for mailing but for service 'by registered or certified mail, return receipt requested.' This Court in 14 Second Avenue Realty Corp. v. Szalay, 16 A.D.2d 919, 229 N.Y.S.2d 722, held that 'Service by mail is complete regardless of delivery where the mailing itself complies with all requisites.' The statute under consideration here does not make the mailing itself compliance.

The decision in Glens Falls Insurance Company v. Anness, 62 Misc.2d 592, 308 N.Y.S.2d 893 holding that service under CPLR 7503(c) is accomplished when the pettion is mailed is, of course, no holding binding on this Court. Nor has it any weighty persuasive effect since its rationale is predicated upon an irrelevant and impermissible assumption of impracticality and inconvenience in adopting the rule mandated by the language of CPLR 7503(c). Expediency and convenience have no place in determining questions of jurisdiction. Jurisdiction is a matter of power not propriety. Moreover, the misplaced solicitude for the practitioner, which is invoked in the Glens Falls Insurance Company case is negated by the facts. Thus, in Matter of Bauer (MVAIC), Supra, the notice of intention to arbitrate was served on December 8, 1967 and evidently, without difficulty, a notice of petition to stay arbitration was received by certified mail, return receipt requested, on December 15, 1967.

In Matter of Jonathan Logan, Inc. (Stillwater Worsted Mills), Supra, Justice Eager, speaking for the Court said (31 A.D.2d p. 211, 295 N.Y.S.2d p. 857):

'It is well known that article 75 of the CPLR was enacted for the purpose of promotion of arbitration as a means for the expeditious settlement of disputes. * * * Such purpose would be thwarted by a construction which would permit the extention, by order to show cause Or otherwise, of the time for the making of an application to the court for a stay of arbitration as to which notice is duly given.' (Italics mine.)

In Matter of General Acc. Fire & Life Assur. Corp. (Cerretto), 60 Misc.2d 216, 303 N.Y.S.2d 223, the Court held that parties could not stipulate to extend the time fixed by CPLR 7503 (subd. (c)) for making an application to stay an arbitration duly demanded under that section. That decision was predicated upon CPLR 201 which provides in part: 'No court shall extend the time limited by law for the commencement of an action.'

To hold here that the proceeding was commenced by mailing the papers upon the application to stay arbitration would by indirection extend the time to commence the proceeding, when in view of CPLR 201, the Court could not do so directly.

The order entered February 13, 1970 should be affirmed with costs.

Order entered on February 13, 1970, affirmed, with $30 costs and disbursements to the respondent.

All concur except EAGER and BASTOW, JJ., who dissent in a dissenting opinion by EAGER, J.

EAGER, Justice (dissenting).

In providing that notice of application for a stay of arbitration may be served 'by registered or certified mail, return receipt requested' (CPLR 7503(c)), the Legislature clearly intended that the service was effective when the notice was properly mailed. This is in accordance with the long standing general rule. For instance, in Hurley v. Olcott, 198 N.Y. 132, 134--135, 91 N.E. 270, the Court of Appeals in its discussion of when notice was deemed served, in connection with an action brought under the Employers' Liability Act, said: 'In many cases the statute provides that notice may be served by mail. Such is the provision as to service of papers on the attorneys in an action, and it has been uniformly held that the service was effective when the papers were properly mailed, regardless of their receipt by the adverse party. The risk of miscarriage is with the party to whom they are directed. (Jacobs v. Hooker, 1 Barb. 71; Brown v. Briggs, 1 How.Pr. 152; Radcliff v. Van Benthuysen, 3 How.Pr. 67.) The law may prescribe other than personal service even of original process by which it is sought to bring a party into court and bind him by its judgment. * * * The only question is the construction of the statute, and in accordance with the uniform current of authority in analogous cases it is clear that the proper deposit in the post is a complete compliance with the statutory requirement.' (See, also, Commercial Credit Corp. v. Ornstein, 245 App.Div. 815, 281 N.Y.S. 321; Desroches v. Caron, 11 Misc.2d 838, 174 N.Y.S.2d 627; Report of Attorney General, 1941, p. 295.)

In view of the ten-day limitation period for the making of the application for a stay of arbitration, the provision for service by mail would be...

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