Monte v. Southern Delaware County Authority

• Decision Date: 08 January 1963
• Docket Number: Civ. A. No. 32008,32046.
• Parties: John MONTE and Robert Monte, trading as John Monte Company v. SOUTHERN DELAWARE COUNTY AUTHORITY. SOUTHERN DELAWARE COUNTY AUTHORITY v. John MONTE and Robert Monte, trading as John Monte Company.
• Court: U.S. District Court — Eastern District of Pennsylvania

212 F. Supp. 604

John MONTE and Robert Monte, trading as John Monte Company v. SOUTHERN DELAWARE COUNTY AUTHORITY.

SOUTHERN DELAWARE COUNTY AUTHORITY v. John MONTE and Robert Monte, trading as John Monte Company.

Civ. A. Nos. 32008, 32046.

United States District Court E. D. Pennsylvania.

January 8, 1963.

Schnader, Harrison, Segal & Lewis, By Arlin M. Adams, Philadelphia, Pa., for Southern Delaware Authority.

Truscott, Kline, O'Neill & Howson, By Frank F. Truscott, Philadelphia, Pa., for Monte.

WOOD, District Judge.

We have before the Court a motion to dismiss and a motion to remand brought by the Southern Delaware County Authority (hereinafter called the Authority).

John Monte and Robert Monte, t/a John Monte Company (hereinafter called Monte) brought Civil Action No. 32008 to confirm an arbitration award under Title 9 U.S.C.A. § 9. Monte also filed Civil Action No. 32046 to remove an action by the Authority brought in the Common Pleas Court of Delaware County to modify, correct or vacate the arbitration award won by Monte.

John Monte Company, a Michigan partnership, engaged in sewer construction, entered into a sewer construction contract with the Authority on October 28, 1958. Monte intended to perform all the work required on this job and pursuant to this intention, Monte moved both men and equipment from Michigan to Pennsylvania. Actual work was begun by Monte on November 22, 1958 and construction was accepted as completed by the consulting engineers on October 4, 1960. The second phase of Monte's contract required a year's maintenance of this sewer project from October 4, 1960 until October 4, 1961. The sewer which Monte constructed was only a part of a system which joined with an outfall sewer to transport sewage to the Delaware River for treatment at the New Castle, Delaware treatment plant. Monte had nothing to do with the outfall sewer system.

Monte attempted to perform the work under the contract, but because of disputes with the consulting engineers Monte was forced to subcontract the work to certain subcontractors. Eventually, these disputes were submitted to arbitration and Monte received a unanimous award from the three arbitrators on August 31, 1962.

Subsequently, these proceedings were instituted by the parties.

Before we begin a discussion of these motions, it is important to a consideration of this unusual matter that we have an understanding of the purpose of the Federal Arbitration Act. The legislative intent of Congress was most ably expressed by Chief Judge Lumbard in Metro Industrial Painting Corp. v. Terminal Construction Co., Inc., 287 F.2d 382, 387 (2 Cir. 1961), cert. den. 368 U.S. 817, 82 S.Ct. 31, 7 L.Ed.2d 24 (1961).

"* * * The Congressional intent was not, therefore, to impose an adjudicative system on those who wished none nor was the intent to affect all contracts possessing certain interstate elements; the purpose of the act was to assure those who desired arbitration and whose contracts related to interstate commerce that their expectations would not be undermined by federal judges, or, since the clarification in Lawrence, by state courts or legislatures. See American Airlines, Inc. v. Louisville & Jefferson County Air Board, 6 Cir., 1959, 269 F.2d 811.

"The significant question, therefore, is not whether, in carrying out the terms of the contract, the parties did cross state lines, but whether, at the time they entered into it and accepted the arbitration clause, they contemplated substantial interstate activity."

DISCUSSION

Question No. 1: Does the Pennsylvania Arbitration Act §§ 161-181 prevent the recipient of a statutory award from moving in the Federal Court for confirmation of the award under § 9 of the Federal Arbitration Act? 9 U.S.C.A. § 9.

The applicable section reads as follows:

"If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made. Notice of the application shall be served upon the adverse party, and thereupon the court shall have jurisdiction of such party as though he had appeared generally in the proceeding. If the adverse party is a resident of the district within which the award was made, such service shall be made upon the adverse party or his attorney as prescribed by law for service of notice of motion in an action in the same court. If the adverse party shall be a nonresident, then the notice of the application shall be served by the marshal of any district within which the adverse party may be found in like manner as other process of the court." (Emphasis supplied)

The contract entered into between Monte and the Authority contains a general provision regarding court proceedings. Section 26(c) of the contract provides as follows:

"If a dispute shall arise under this Contract on which the determination of the Consulting Engineers is not conclusive, the parties agree to facilitate the determination thereof by means of the submission of questions of fact involved in such disputes to arbitration in accordance with the method hereinafter provided, and all questions of law arising out of such disputes involving the legal rights and liabilities of the parties hereunder shall be determined by appropriate courts, either on such agreed statements of fact or on, or in, connection with the findings of the arbitrators as the case may be, and no claim of arbitration or submission thereto shall prejudice either of the parties with respect to any claim which it may make for the determination by a court of the proper legal interpretation of this Contract or for the determination by a court of the legal rights and liabilities of either of them under this Contract, and the determination of any question of fact by arbitration shall always be subject to the determination of the legal rights and liabilities of the parties by a court of competent jurisdiction. If either party disputes that a difference of facts exist which is submissible to arbitration under this Contract and such contention shall be presented to a court on a motion to compel arbitration to proceed, then the parties waive their right to claim a trial by jury of any of the issues involved in such proceeding.

"Neither of the parties shall be bound to present such contention prior to the arbitration, but by a proper statement made to the arbitrators may reserve such question for presentation by and consideration on a motion to confirm, vacate or modify the award rendered, or otherwise. The award of the arbitration shall, at the request of either party, be stated in such form that it presents the facts found upon the issues submitted and thereupon either party may ask the court to determine any question of law relating either to the duty to arbitrate the issues of fact presented to the arbitrators, if such questions were reserved as above provided, or the legal rights and liabilities of the parties under this Contract in relation to such issues. In a proper case, such award of the arbitrators shall be used for all purposes as an agreed statement of facts between the parties."

The contract does not provide for any particular court in which the award is to be confirmed. Therefore, if all the other jurisdictional requirements are met, namely: diversity of citizenship, $10,000.00 and commerce, this motion to confirm is properly before this Court. In the case of Hartmann Coal Mining Co., Inc. v. Hoke, 157 F.Supp. 313, 315 (E.D. Pa.1957) Judge Ganey said:

"Defendants give as an additional reason for this Court's lack of jurisdiction the proposition that conformation and recovery of an arbitration award in Pennsylvania must be had in the proper court of common pleas of this State as required by the Arbitration Act of 1927, P.L. 381, as amended, 5 Pa.P.S. §§ 161-181. Such a proposition is not the law. The Act of 1927 is remedial only; proceedings under it are cumulative and non-exclusive. The Act did not do away with the right to bring suit to recover an arbitration award. Isaac v. Donegal & Conoy Mut. Fire Ins. Co., 1930, 301 Pa. 351, 152 A. 95; Goldstein v. International, etc., 1938, 328 Pa. 385, 394, 196 A. 43; Sukonik v. Shapiro, 1939, 333 Pa. 289, 5 A.2d 108; Lowengrub v. Meislin, 1954, 376 Pa. 463, 103 A.2d 405." (Emphasis supplied)

The Federal Courts of other jurisdictions are also in accord with this proposition. See Gaddis Mining Co. v. Continental Materials Corp., 196 F.Supp. 860 (D.C. 1961).

We do not have the problem of deciding whether this award was a statutory award or a common law award.¹ The contract does not specifically provide for the Arbitration Act of 1927. Section 26(d) of the Agreement provides, inter alia:

"* * * Except as otherwise provided, the arbitration shall proceed under and pursuant to the rules of the State of Pennsylvania, the parties hereby certifying and agreeing that they have read and are familiar with said rules. * * *"

Both of the parties concede that they followed the Act of 1927 in all their arbitration hearings. Also, since the Authority is a Municipal Corporation created under the Municipality Authorities Act of 1945, Article I, 53 P.S. §§ 301 through 322, it is an agent of the State of Pennsylvania. In re Simon's Appeal, 408 Pa. 464, 184 A.2d 695 (1962). The Arbitration Act of 1927 at § 16, 5 P.S. § 176, makes it mandatory that all contracts made by any municipal corporation, etc., shall apply the Arbitration Act of 1927 to any provision for arbitration in the...