Mike Bradford & Co. v. Gulf States Steel Co.

• Citation: 184 So.2d 911
• Decision Date: 05 April 1966
• Docket Number: No. 65--432,65--432
• Parties: MIKE BRADFORD & COMPANY, Inc., Appellant, v. GULF STATES STEEL COMPANY, Inc., et al., Appellees.
• Court: Florida District Court of Appeals

Page 911

184 So.2d 911

MIKE BRADFORD & COMPANY, Inc., Appellant, v. GULF STATES STEEL COMPANY, Inc., et al., Appellees.

No. 65--432.

District Court of Appeal of Florida, Third District.

April 5, 1966.

Miller & Russell, Miami, for appellant.

Ward & Ward, Miami, for appellees.

Before HENDRY, C.J., and PEARSON and BARKDULL, JJ.

PEARSON, Judge.

The appellant, Mike Bradford & Company, Inc., brought an action against the appellee, Gulf States Steel Company, Inc., for damages on an alleged breach of a written contract. The appellee answered and counterclaimed for damages under the same contract. The cause came on for trial about five and one-half months after the filing of the complaint. After the jury had been sworn, the appellee moved in open court for an order to stay the proceedings and compel arbitration. The motion was granted. This appeal raises the question of whether the appellee had, by answering, counterclaiming and proceeding to trial, waived the provision in the contract which required arbitration. We hold that a waiver was effected and reverse.

The appellant, Bradford, is a general contractor. The appellee, Gulf, is a steel-erection company. They entered into a contract for the erection of an aircraft maintenance dock at the Homestead, Florida, Air Force Base. The contract provided that controversies arising out of the contract would be submitted to the American Arbitration Association. The contract specifically provided: 'It is mutually agreed that the decision of the arbitrators appointed in accordance with said rules shall be a condition precedent to any right of legal action that either party may have against the other.'

Bradford's complaint, filed on November 12, 1963, claimed damages for alleged delinquencies of Gulf in its completion of the contract. Gulf's answer denied the breaches alleged, and its counterclaim alleged breaches of the contract by Bradford. No demand for arbitration had been made by either party and none was included in any of the pleadings.

The cause came on for trial on April 28, 1964; the jurors were called, examined and sworn. The next day, when the taking of evidence was to begin, the appellee, Gulf, for the first time raised the question of arbitration. The record reveals that the motion was made four months after appellee's answer and two months after the cause had been set for trial.

The trial judge entered an order staying the proceeding and directing the parties to proceed with arbitration. The arbitration terminated adversely to the appellant Bradford and it has appealed the judgment entered thereon. The first point presented is that the court erred in compelling arbitration after the trial began. In essence, the appellant urges that the appellee, by its action, waived the provision requiring arbitration. The appellee urges that the prime question is not waiver, but whether or not Bradford had any right to maintain the action without complying with the condition precedent requiring arbitration. To accept the appellee's argument would require a holding that a provision requiring arbitration as a condition precedent to suit may not be waived.

We begin with the proposition that the parties to a contract may lawfully require arbitration before a resort to legal process, but they may not, by their contract totally exclude the courts from a consideration of their dispute under every circumstance which may possibly arise. The construction of the contract to arbitrate is for the courts, and it would be against public policy to hold that a contract could not, where necessary for the effective administration of justice, be submitted to the courts. This is not to say that a provision making a resort to arbitration a condition precedent to legal action is not valid. The provision is not an automatic exclusion of the courts, and the pertinent inquiry must be whether the provision is effective or ineffective under the conditions here set forth. See 6A Corbin on Contracts §§ 1435, 1443.

The rule of general adherence seems to be that if a party to a contract, containing a provision for arbitration, even though expressed as a condition precedent, himself, commences suit, or takes other inconsistent action therewith, he will be held to have waived his rights to arbitration. 6 Williston, Contracts, § 1921A (Rev. ed. 1938). See also, Mayron's Bake Shops, Inc. v. Arrow Stores, Inc., 149 Conn. 149, 176 A.2d 574 (1961); Hill v. Mercury Record Corp., 26 Ill.App.2d 350, 168 N.E.2d 461 (1960); Anderson v. Twin City Rapid Transit Co., 250 Minn. 167, 84 N.W.2d 593 (1957); Niazi v. St. Paul Mercury Insurance Co., 265 Minn. 222, 121 N.W.2d 349 (1963).

In Mayron's Bake Shops, Inc. v. Arrow Stores, Inc., 149 Conn. 149, 176 A.2d 574 (1961), a lease provided that any dispute between the landlord and tenant should be submitted to arbitration. There was a dispute about the payment of rent and the landlord served upon the tenant a notice to quit. Four week later, the landlord filed an action for summary process to remove the tenant. Three weeks later, the tenant filed an answer to said process, and on the day after filing the answer, moved to stay proceedings until arbitration was had. The tenant took no action during the entire seven weeks. The court held that the conduct of the tenant constituted a waiver of his right to arbitration, and that the denial of the motion for stay was proper.

Anderson v. Twin City Rapid Transit Company, 250 Minn. 167, 84 N.W.2d 593 (1957), involved a dispute between employers and employees as to discharge of certain employees. On appeal the defendants, employers, claimed a right to arbitration. This issue had not been raised until the case had been set for trial--approximately 16 months after the plaintiffs, employees, had instituted the action. The court held:

'* * * Whatever right to arbitrate existed, it was a right the choice of which rested on either party, and those provisions as far as effective were as binding on one party as the other. In fact, both parties had proceeded without wholly recognizing the conversion-board clause and disregarding the same for more than a year. The plaintiffs, whether bound by the clause or not, repudiated it by commencing this law suit and the defendants joined in the repudiation by answering to the merits without a demand for arbitration or a motion to stay the suit until arbitration could be had. Almost uniformly such conduct on the part of the parties constitutes an abandonment or waiver of the right to arbitration and a consent to the submission of the controversy to the courts. This rule has been established by an almost uniform line of decisions and this rule is not a new one in this jurisdiction.' (84 N.W.2d at 602).

The Supreme Court of Minnesota has reiterated this holding in subsequent cases. See Rowan v. K. W. McKee, Inc., 262 Minn. 366, 114 N.W.2d 692 (1962); Cunningham v. Federal Cartridge Corp., 265 Minn. 534, 122 N.W.2d 208 (1963). And the court has...