Kramer v. Dreyfus & Co.

• Decision Date: 02 March 1960
• Citation: 207 N.Y.S.2d 29,25 Misc.2d 594
• Parties: Sidney KRAMER, Plaintiff, v. DREYFUS & CO., a co-partnership, Defendant.
• Court: New York Supreme Court

Page 29

207 N.Y.S.2d 29

25 Misc.2d 594

Sidney KRAMER, Plaintiff, v. DREYFUS & CO., a co-partnership, Defendant.

Supreme Court, Special Term, New York County, Part I.

March 2, 1960.

Erdheim & Armstrong, New York City (Irving I. Erdheim and Fred Lichtblau, New York City, of counsel), for plaintiff.

Stroock & Stroock & Lavan, New York City, (Alan M. Stroock, Martin D. Eile and Roger S. Kuhn, New York City, of counsel), for defendant.

MATTHEW M. LEVY, Justice.

The plaintiff is suing the defendant for damages on three causes of action. The first two are based on fraud and the third is predicated in part on negligence. The plaintiff claims that, on January 5, 1959, he entered into an agreement with the defendant whereby the defendant, for a fee, undertook to counsel and advise the plaintiff from time to time concerning the investment and reinvestment of cash and securities deposited in a security account by the plaintiff with the defendant. In the first and second causes of action, the plaintiff alleges that, during the months of March and April, 1959, the defendant made fraudulent representations as to certain securities and advised the plaintiff to invest large sums of money in them. The plaintiff further alleges that, as a result thereof, he was damaged in a sum which he seeks to recover. In the third cause of action, it is alleged in part that the misrepresentations were made negligently by the defendant, to the plaintiff's damage. The defendant denies the charges of fraud, negligence and breach of contract.

This is a motion by the defendant to stay the action until arbitration has been had of the causes alleged in the complaint. The agreement of January 5, 1959, does not contain an arbitration clause. It appears that, subsequent to the signing and execution of that 'Investment Counselling Agreement', the plaintiff opened a brokerage account with the defendant and signed a 'Customer's Agreement' on February 19, 1959, which does provide for arbitration. There is no dispute that the defendant did act as broker in respect of all of the transactions set forth in the complaint as having been entered into on the basis of the Investment Counselling Agreement. The defendant maintains that the parties intended, by the second agreement, that all disputes arising out of transactions in which the defendant acted as broker would be subject to arbitration. The applicable paragraph provides, in its pertinent part, that '16. Any controversy between you [the defendant] and the undersigned [the plaintiff] arising out of or relating to this contract or the breach thereof, shall be settled by arbitration, in accordance with' certain prescribed machinery. (Italics mine.)

I hold that the two agreements are separate and distinct, and are not to be correlated, one with the other. They serve different functions. The January 5 agreement calls for investment advisory service, whereas the February 19 agreement is the usual brokerage agreement whereby the defendant undertook to buy and sell securities on behalf of and on instructions of the plaintiff. The two instruments were not executed concurrently, and make no reference to each other. They contemplate widely different services, call for entirely different methods of compensation, and can operate separately and apart from each other. The...