Parry v. Bache

• Decision Date: 05 February 1942
• Docket Number: No. 10042.,10042.
• Citation: 125 F.2d 493
• Parties: PARRY v. BACHE et al.
• Court: U.S. Court of Appeals — Fifth Circuit

125 F.2d 493 (1942)

PARRY v. BACHE et al.

No. 10042.

Circuit Court of Appeals, Fifth Circuit.

February 5, 1942.

Charles W. Zaring, of Miami, Fla., for appellant.

Melvin J. Richard, of Miami Beach, Fla., for appellees.

Before FOSTER, HUTCHESON, and HOLMES, Circuit Judges.

HUTCHESON, Circuit Judge.

Defendants, citizens of the city and state of New York, and resident therein, are co-partners in a banking and brokerage business with their principal office in New York and branches and agencies in other cities and states. Plaintiff, a resident citizen of Florida and a customer of defendants, by purchases of listed stocks, arranged through their Miami, Florida office, brought this suit in the state court for an accounting with reference to stocks for which he had given purchase and sale orders to defendants.¹ Defendants removed the cause into the Federal court and alleging that the suit was upon "an issue referable to arbitration under an agreement in writing for such arbitration",² moved for³ and after hearing on "affidavits filed and proof heard", were granted a stay of the trial of the action until such arbitration has been had in accordance with the terms of the agreement.⁴

Plaintiff here, insisting that the invoked statute is without application, makes seven points against the appealed order: (1) That the agreement is not, within the meaning of the Statute, in writing; (2) that there is not sufficient signing by the partners under New York law to make the arbitration agreement binding; (3) that there is not sufficient proof of the purchase and sale of stocks alleged to constitute interstate commerce; (4) that assuming the purchase and sale this did not constitute such commerce; (5) that the accounting plaintiff sued for is not a controversy within the arbitration clause; (6) that arbitration goes to the remedy, the remedy to be applied is determined by the law of the forum, and under Florida law the arbitration agreement is not enforceable; (7) plaintiff, under Florida law, had a defense to the agreement, while the suit was in the state court and its removal could not deprive him of this defense.

We cannot agree with plaintiff. It is perfectly clear that the agreement for arbitration was in writing,⁵ and that it was made and acted on by both plaintiff and defendants under circumstances which bound them both to its terms as written, including Clause 10 for arbitration. It is also too clear on the record for any question to be made of it that the matter in suit involved orders by mail and telegraph for, and actual purchases and sales of, stock in interstate commerce.⁶ Finally, it is equally clear that; the case involves a controversy covered by the arbitration agreement; that having been removed to the federal court, it proceeds as though it had been originally commenced there,⁷ that the invoked statute being remedial,⁸ controls the procedure in the federal court; and that the view the state court might take of the arbitration agreement is wholly immaterial.

In this view, the agreement being clearly one "evidencing a transaction involving commerce", we do not undertake to determine whether as ably argued,⁹ by appellees, the invoked section of the arbitration act is broader than the preceding sections and, not limited as those are, to maritime transactions and those involved in commerce, extends to all issues "referable to arbitration under an agreement in writing for such arbitration."

The judgment granting the stay was right. It is affirmed.

1 It was alleged: (1) That defendants were engaged in the business of buying and selling stocks and other securities for customers upon commission and in furnishing customers facilities for such purchase and sale; (2) that plaintiff gave, on April 16th and 20th, 1940, buying orders and made margin deposits with defendants; (3) that it was defendants' duty to actually purchase the stocks and hold them until sold or delivered on plaintiff's order; (4) that defendants accepted the orders and represented that they had purchased the stock; (5) that to protect himself from losses, plaintiff, from time to time, placed stop loss orders with defendants but on information and belief, they ignored them and sold the stocks after a heavy decline; (6) that plaintiff is without exact knowledge of the state of his account or the price at which the stocks were sold or whether defendants actually purchased the stocks. There was a prayer, for an accounting, and a judgment in accordance therewith.

2 The agreement relied on is the regular General Customers Agreement. Signed by plaintiff, it requests the opening of an account for the purchase of stocks; agrees to be bound by the provisions of the Customers Margin Agreement attached, and also signed by plaintiff; agrees that all transactions for his account are to be subject to the rules of the exchange where transactions are executed, makes further agreements, and concludes with Section 10, the arbitration clause: "This agreement and its enforcement shall be governed by the laws of the State of New York. Any controversy between you and me arising out of, or relating to this contract, or the breach thereof, shall be determined by...