San Carlo Opera Co. v. Conley
| Decision Date | 12 August 1946 |
| Citation | 72 F. Supp. 825 |
| Parties | SAN CARLO OPERA CO. v. CONLEY. |
| Court | U.S. District Court — Southern District of New York |
Max Schoengold, of New York City, for San Carlo Opera Co.
Gins & Massler, of New York City (Montrose H. Massler, of New York City, of counsel), for Eugene Conley.
Eugene Conley, one of the parties to the arbitration, was employed by the San Carlo Opera Company, the other party thereto, as a tenor in the performance of various operatic compositions throughout the United States in the early 1940s. Subsequently Conley became a member of the armed forces of the United States terminating his services for the company. On June 30, 1944, Conley, through his authorized representative, Ettore Verna, entered into an option agreement in writing with the San Carlo Opera Company, while he was still a member of the armed forces. The option agreement provided in part:
"That for and in consideration of the mutual promises and covenants herein contained and the sum advanced of $1500 and for other good and valuable considerations by the Company unto the Artist in hand paid, receipt whereof is hereby acknowledged, and, in consideration of the granting of the irrevocable option hereinafter set forth, by the artist to the Company:
The Artist does hereby grant unto the Company an irrevocable option to obtain the sole and exclusive services of the Artist as a Tenor singer of leading roles in grand opera for a period of three years commencing from the date of the exercise of the said option by the Company.
The said option is to be exercised by the Company on or before six weeks after the Artist shall have notified the Company by registered mail of his honorable discharge from the United States Army. The Artist agrees to notify the Company immediately upon his discharge from the army. The Company agrees to notify the Artist of its election to exercise the said option on his services * * *.
* * * * * *
"It is agreed and understood by the parties hereto that the services of the Artist are unique, peculiar, extraordinary and of great value to the Company and impossible of replacement * * *.
* * * * * *
"This contract shall be subject to all the terms and provisions of the basic agreement now or hereinafter existing between the Company and the American Guild of Musical Artists Inc. and the parties agree that upon the exercise of the option of the Company they will enter into an Artist's Agreement with each other in accordance with the said basic agreement and the terms herein agreed upon."
Appended to this agreement is a printed standard contract form entitled "Standard Artist's Contract for Employment", executed by the same parties who signed the option agreement, dated June 30, 1944, and bearing the legend "The attached agreement is a part of the Contract". This contract contains the following provision:
The basic agreement, referred to in the main option contract and in the standard form contract, was entered into on December 24, 1942 by the San Carlo Opera Company and the American Guild of Musical Artists, Inc. Among other things the basic agreement states that its provisions shall apply to and inure to the benefit of all artists employed or engaged by the San Carlo Opera Company and in paragraph 12 it provides that every contract between San Carlo and any artist shall be deemed to contain a quoted arbitration clause, for the submission of any disputes or controversies to arbitration. The quoted arbitration clause is the same as that contained in the standard form contract set forth above. The clause provides for a method of selecting the arbitrators and umpire and for the prompt hearing and decision of the issues.
Sometime after the execution of these agreements and in December of 1945 Conley was honorably discharged from the armed forces. On December 8, 1945 the San Carlo Opera Company, having learned of the artist's discharge, exercised the option under the agreement of June 30, 1944, by directing a letter to Conley via registered mail notifying him of this fact and requesting him to report at certain designated places to sing operatic roles.
Conley failed and refused to undertake any performances for or at the direction of the company. On March 13, 1946 the San Carlo Opera Company filed with the American Arbitration Association a demand for arbitration under the terms of the above mentioned agreements, seeking to establish the validity of the contract of employment, the breach thereof and an assessment of damages. San Carlo named Milton Weir as its arbitrator. On April 4, 1946, Conley filed a reply denying the validity of the company's claims and designated Lawrence Tibbet as his arbitrator. A list of names was submitted to the two arbitrators for the purpose of selecting a third arbitrator or umpire. Apparently Milton Weir did not indicate any preferences and Lawrence Tibbet selected as fourth in the order of preference a Mr. Saul Abraham. After attempting to secure the services of other persons to act as the third arbitrator, the American Arbitration Association designated Saul Abraham to serve as umpire.
On May 10, 1946 the first hearing of the board of arbitrators was held. Counsel for Conley alleges that it was at the conclusion of this hearing that he first learned of negotiations then in progress for a contract between the League of New York Theatres, Inc., and the Association of Theatrical Agents and Managers and that Milton Weir and Saul Abraham were respectively counsel to and president of the two organizations conducting the negotiations.
When the hearing resumed on May 13, 1946 counsel for Conley requested an adjournment for the purpose of presenting to the appropriate committee of the American Arbitration Association the above facts concerning Weir and Abraham. During the discussion concerning the adjournment the following was stated on the record:
Thereafter a recess was had during which the counsel for the parties and the arbitrators conferred. The hearing was resumed and the following was stated on the record:
During the period of adjournment and on June 11, 1946, counsel for Conley applied to the American Arbitration Association for a hearing before the proper committee of the association on his objections to the arbitrators. The Committee found that: "There is no evidence of disqualification of either Saul Abraham or Milton Weir". Thereafter, on July 11, 1946, counsel for Conley petitioned this court for an order to show cause why Milton Weir and Saul Abraham should not be disqualified from continuing to act as arbitrators and obtained a stay of the arbitration proceeding pending the determination of the motion. On July 17, 1946 counsel for the company petitioned the court for a counter order dismissing the artist's order to show cause and vacating the stay of arbitration proceedings contained therein, on the ground that this court did not have jurisdiction over the proceeding under §§ 112 and 113 of Title 28 U.S.C.A., and for such other and further relief as might be just and proper.
The specific questions presented by the two motions are: (1) Whether the court has jurisdiction to hear the application to disqualify the arbitrators; and (2) Whether, if jurisdiction exists, the court is vested with the power to disqualify any arbitrators appointed pursuant to the contract of the parties, before a determination or award by the board of arbitrators.
Title 9 of the U.S.C.A. is entitled: "An act to make valid and enforceable written provisions or agreements for arbitration of disputes arising out of contracts, maritime transactions, or commerce among the States or Territories or with foreign nations." 43 Stat. 883. This statute is the basis of a federal court's jurisdiction over matters pertaining to arbitration agreements. In order to fix jurisdiction under the Act it is necessary to establish three elements, which are set forth in 3 Moore,...
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