Lappe v. Wilcox
Decision Date | 30 September 1926 |
Citation | 14 F.2d 861 |
Parties | LAPPE v. WILCOX. |
Court | U.S. District Court — Northern District of New York |
Hinman, Howard & Kattell, of Binghamton, N. Y., for plaintiff.
Albert S. Barnes, of Binghamton, N. Y., for defendant.
This is a motion by the defendant under sections 2 and 5 of the Arbitration Law of the state of New York (chapter 275 of the Laws of 1920) to stay this action until the controversies between the parties have been settled under the arbitration agreement made by the parties to the action.
Plaintiff, a resident of Pittsburgh, Pa., on December 7, 1918, made a contract for the sale of leather on commission with the defendant, a resident of Binghamton, N. Y., which was executed in Binghamton. A controversy subsequently arose concerning the amount due plaintiff. On February 12, 1921, the parties made an arbitration agreement in the city of Binghamton, N. Y., which is as follows:
Each party subsequently appointed arbitrators, but the arbitrators did not act, because one lived in Pittsburgh and one in Binghamton, and neither would meet with the other at his home city. Subsequently the plaintiff brought this action in this court to recover the alleged commissions due.
The defendant sets up the arbitration agreement, and by virtue of sections 2 and 5 of the arbitration statute of New York (chapter 275 of the Laws of 1920) asks this court to stay the action until plaintiff has proceeded with the arbitration as provided in the arbitration agreement. The pertinent provisions of the statute are as follows:
The defendant asserts that this statute applies to the parties to this action and that he is entitled to invoke its provisions in this court. The plaintiff contends that the statute cannot impair the jurisdiction of the federal court or affect the right of a nonresident to bring action in the federal court of the state of New York for breach of contract.
Prior to the enactment of this state statute, arbitration agreements were in disfavor and were not enforced by the state courts. Meacham v. Railway Co., 211 N. Y. 346, 105 N. E. 653, Ann. Cas. 1915C, 851. In the federal courts, also, arbitration agreements were in disfavor and were not enforced. Munson v. Straits of Dover S. S. Co. (D. C.) 99 F. 787. Aktieselskabet Korn-og Foderstof Kompagniet v. Rederiaktiebolaget Atlanten, 250 F. 935, 163 C. C. A. 185, Ann. Cas. 1918E, 491. But actions were permitted for damages, based solely on the breach of contract to arbitrate in both courts. Berkovitz v. Arbib, 230 N. Y. 261, 130 N. E. 288. This statute of 1920 has changed the common law of remedies in the state of New York and is binding on the state courts. Berkovitz v. Arbib, 230 N. Y. 261, 130 N. E. 288; Red Cross Line v. Atlantic Fruit Co., 264 U. S. 109, 44 S. Ct. 274, 68 L. Ed. 582.
But statutes of the state of New York cannot affect nonresidents of the state, who have the right, denied to inhabitants of the state, to invoke the jurisdiction of the federal court. From early times it has been consistently held that state statutes which have the effect of impairing the rights and remedies of nonresident suitors entitled to resort to the federal courts for redress are invalid and ineffective as to such nonresident suitors. In Hyde v. Stone, 20 How. 170, 175 (15 L. Ed. 874), the court said:
In David Lupton's Sons Co. v. Auto Club, 225 U. S. 489, 32 S. Ct. 711, 56 L. Ed. 1177, Ann. Cas. 1914A, 699, section 15 of the General Corporation Law of the state of New York ( ) was involved. By that section a foreign corporation, other than a money corporation, is prohibited from doing business in the state without having first procured from the secretary of state a certificate that it has complied with certain prescribed conditions. The section further provides:
"No foreign stock corporation doing business in this state shall maintain any action in this state upon any contract made by it in this state, unless prior to the making of such contract it shall have procured such certificate."
The plaintiff in the Lupton Case was a foreign stock corporation domiciled in the state of Pennsylvania, and it brought an action in the federal court in the state of New York against the defendant for breach of contract. One of the defenses was that the Lupton Company could not maintain its action, because it was a foreign corporation doing business in the state of New York without the certificate of authority required by section 15 of the General Corporation Law of that state. The referee to whom the case was referred by stipulation held that the contract was void for violation of that statute and that the complaint should be dismissed. The Supreme Court, in an opinion by Mr. Justice Hughes, held at page 499 (32 S. Ct. 714):
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Southland Corporation v. Keating
...580, 590 (1952). 26 See, e.g., Atlantic Fruit Co. v. Red Cross Line, 276 Fed. 319 (SDNY 1921), aff'd, 5 F.2d 218 (CA2 1924); Lappe v. Wilcox, 14 F.2d 861 (NDNY 1926). 27 Joint Hearing 35. 28 See S.Rep. No. 536, supra, at 29 The Uniform Act tracked the "valid, irrevocable, and enforceable" l......
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Robert Lawrence Company v. Devonshire Fabrics, Inc.
...inapplicable. California Prune & Apricot Growers' Ass'n v. Catz American Co., 9 Cir., 1932, 60 F.2d 788, 85 A.L.R. 1117; Lappe v. Wilcox, D.C.N.D.N.Y.1926, 14 F.2d 861. And the federal judicial power in admiralty was deemed not to have been unduly extended by the new enforcement provisions ......