Madison Hill Corp. v. Continental Baking Co.

• Decision Date: 09 July 1964
• Citation: 251 N.Y.S.2d 300,21 A.D.2d 538
• Parties: MADISON HILL CORPORATION, Petitioner-Appellant, v. CONTINENTAL BAKING COMPANY, Respondent-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 300

251 N.Y.S.2d 300

21 A.D.2d 538

MADISON HILL CORPORATION, Petitioner-Appellant, v. CONTINENTAL BAKING COMPANY, Respondent-Respondent.

Supreme Court, Appellate Division, First Department.

July 9, 1964.

Michael P. Arra, New York City, of counsel (Richard Barth, New York City, on the brief; Burke & Burke, New York City, attorneys), for petitioner-appellant.

Donald J. Zoeller, New York City, of counsel (Nixon, Mudge, Rose, Guthrie & Alexander, New York City, attorneys), for respondent-respondent.

Before BREITEL, J. P., and RABIN, VALENTE, STEVENS and STALEY, JJ.

BENJAMIN J. RABIN, Justice.

On September 1, 1950 the petitioner as landlord, and the respondent as tenant, entered into a lease of a bakery building that was to be constructed by the landlord in Sacramento, California. In April, 1952 the tenant took occupancy of the bakery. In November, 1952, the tenant advised the landlord that there were certain deficiencies in the construction, among which were defects in the roof installation. After negotiation the landlord agreed to correct these defects and in fact undertook to do so. In September, 1953 the tenant advised the landlord that the defects had been satisfactorily corrected and that the premises had been accepted.

Thereafter, a dispute arose as evidenced by a letter dated October 14, 1957 sent by the tenant to the landlord complaining that the roof was defective and had not been installed according to specifications. On May 18, 1962 the tenant served a demand for arbitration, seeking to recover the sum of $39,520.93 allegedly expended by it for the repair of the roof. The demand described the nature of the dispute as follows:

'Extensive damage was occasioned to the roof on the premises demised under said lease dated September 1, 1950, at which time insurance covering said damage was not readily obtainable by the Lessee. The tenant claims under the lease dated September 1, 1950 that landlord is responsible for said roof repairs and the landlord * * * has denied the obligation.'

Prior to the holding of any hearings the landlord instituted this proceeding to stay the arbitration. The basis for the application was that the claim was barred by the statute of limitations since it was directed to faulty construction completed more than six years prior to the service of the demand for arbitration. Thereafter, as an additional ground for a stay the landlord asserted that the parties had not agreed to arbitrate such a dispute.

Special Term denied the stay, holding that the statute of limitations was no bar to at least a portion of the landlord's claim and held further that the dispute as to who was obligated to pay for the roof repairs had been made subject to arbitration by the lease. We do not agree.

Agreements to arbitrate may be broad and all-inclusive, or may be limited to specific items of dispute (See Matter of Hub Industries [George Mfg. Corp.], 269 App.Div. 177, 54 N.Y.S.2d 741, affd. 294 N.Y. 897, 63 N.E.2d 28). The lease involved in this proceeding, and under which an adjudication of the rights of the parties is sought, contains no broad general agreement to arbitrate any and all disputes between the parties. The arbitration clauses are limited ones--the parties agreeing to arbitrate only in certain specific circumstances. That is made evident by paragraph 24(a) which provides as follows:

'Wherever in this lease provision is made for settlement by arbitration of a dispute or question between Landlord and Tenant, the same shall be settled by arbitation in accordance with the rules * * * of the American Arbitration Association.' [Emphasis supplied].

Whether the parties agreed to arbitrate this particular dispute depends upon how the lease is construed. There being no broad general arbitration clause which would permit arbitrators to construe the lease (see Matter of Uraga Dock Co. [Mediterranean & Oriental S.S. Corp.], 6 A.D.2d 443, 179 N.Y.S.2d 474, affd. 6 N.Y.2d 773, 186 N.Y.S.2d 669, 159 N.E.2d 212), it is for the court to determine that question (Matter of Kelley, 240 N.Y. 74, 79, 147 N.E. 363, 364; Matter of Miller Art Co., Inc., 4 A.D.2d 1032, 168 N.Y.S.2d 732).

As indicated, the dispute--as set forth in the demand for arbitration--concerns the petitioner-tenant's claim that the respondent-landlord is obliged to reimburse it in the sum of $39,520.93, the sum alleged to have been expended by it for the repair of the roof of the demised premises. It is the tenant's contention that the obligation to pay for such repairs rests with the landlord, while the latter takes the position that the tenant is so obligated.

The lease contains three paragraphs that treat with the subject of repairs and the responsibility to make the same. Paragraph 6--containing no arbitration provisions--requires the tenant to 'maintain the * * * premises * * * in good and substantial repair.' Paragraph 8--which does contain limited provisions for arbitration--provides that where the premises 'shall be destroyed or damaged in whole or in part by fire, or as a result directly or indirectly of war, or by act of God, or by reason of any other cause whatsoever' the landlord is obliged, at its expense, to repair, replace and rebuild. Paragraph 11 treats with the landlord's obligation to make certain repairs upon partial condemnation of the premises and is clearly not here applicable.

As aforesaid, Paragraph 6 contains no provision for arbitration, while Paragraph 8 does provide for arbitration of two types of disputes which may arise thereunder. Thus, if the roof repair made by the petitioner-tenant is a Paragraph 6 repair, arbitration may not be had. If, on the other hand, it is a repair the type of which it is the landlord's obligation to make under Paragraph 8, then, and only then, would the limited arbitration provision of that paragraph...