Smith v. Superior Court In and For Los Angeles County

• Decision Date: 03 April 1962
• Citation: 202 Cal.App.2d 128,20 Cal.Rptr. 512
• Parties: Harry SMITH, Appellant, v. SUPERIOR COURT of the State of California IN AND FOR the COUNTY OF LOS ANGELES, Respondent. Civ. 26160.
• Court: California Court of Appeals Court of Appeals

Page 512

20 Cal.Rptr. 512

202 Cal.App.2d 128

Harry SMITH, Appellant, v. SUPERIOR COURT of the State of California IN AND FOR the COUNTY OF LOS ANGELES, Respondent.

Civ. 26160.

District Court of Appeal, Second District, Division 4, California.

April 3, 1962.

Richard S. Miller, Studio City, for appellant.

Gold, Sturman & Gold, Beverly Hills, for real party in interest.

PER CURIAM.

This is an application for a writ of prohibition directed to the Superior Court for the County of Los Angeles commanding said court to refrain from proceeding with a trial on the merits in an action therein commenced until such time as petitioner's appeal from the order denying enforcement of an arbitration agreement shall have been determined.

On April 18, 1956, Harry Smith and Sam Smith, brothers, entered into a written partnership agreement for the purpose of operating a newsstand. Paragraph 14 of the agreement provides: 'Should a question of difference of opinion arise between the partners which appears incapable of determination between themselves, Louis A. Sackin, the attorney for the partners shall appoint an impartial, independent arbiter who shall render a decision which the parties hereto agree to abide by, and his decision shall be both final and conclusive on both the parties, * * *'

On March 20, 1961, Harry Smith, through his attorneys, caused a letter to be written to Sam Smith, in which it is stated: 'Mr. Smith [Harry] feels, taking into consideration the recent deterioration in the relationship between you and himself and the reduced profit which the business is yielding due to high rent and increased operating expenses, that it will be in the best interest of the business and of both of you to dissolve the partnership effective March 31, 1961. After said date, it is our understanding that unless some agreement has been reached pursuant to which you become the purchaser of Smith News Company he will, after said date, engage in the news stand business, if at all, on his own account.' ¹

The record reveals no further action in the matter until May 26, 1961, when Sam Smith filed a complaint in the superior court for dissolution of the partnership, for an accounting and appointment of a receiver.

On July 3, 1961, Harry Smith filed his answer, admitting the execution of the agreement on April 18, 1956, but denying all other allegations. As a first affirmative defense and counterclaim, it is alleged that plaintiff had violated the provision of the contract which provides that '[e]ach of the partners is to give his undivided time and attention to the business, and is to use his utmost endeavors to promote the interests of the firm,' all to defendant's damage in the sum of $10,000. As a second affirmative defense, defendant alleges his written notice of intention to dissolve the partnership, as of March 31, 1961, per letter of March 20, 1961. As a third affirmative defense, he quotes paragraph 14 of the agreement and alleges: 'Plaintiff has not submitted to arbitration, the subject matter of the litigation involved herein.'

The pretrial conference order of November 29, 1961, states: 'The defendant seeks a reference of the case to an arbitrator under the provisions of paragraph 14 of the partnership agreement or in the alternative that the partnership be deemed dissolved as of March 31, 1961; and for an accounting and for damages for breach of a condition of the partnership agreement by way of counterclaim. * * * Leave is granted the defendant to make a motion in the proper department of this court for a determination of the question, whether the provisions of paragraph 14 of the partnership agreement of April 18, 1956, deprives this court of jurisdiction to proceed for an accounting and dissolution. * * *' The case was set for trial on January 26, 1962.

On January 8, 1962, Harry Smith (petitioner herein) filed a petition for order directing that arbitration proceed in accordance with the agreement, and a motion to stay action until arbitration has been had. After a hearing, the court, on January 18, made this order: 'Motion denied. Lack of timeliness. 5 Cal.Jur.2d, Arbitration, Sec. 18.' On January 22, 1962, petitioner filed his notice of appeal from the order and upon the same date filed a motion to stay action until determination upon appeal of his right to arbitration. The latter motion was denied on January 24, 1962. Whereupon the within petition for writ of prohibition was filed.

Code of Civil Procedure, section 1281.4, provides in relevant part: 'If an application has been made to a court of competent jurisdiction, whether in this State or not, for an order to arbitrate a controversy which is an issue involved in an action or proceeding pending before a court of this State and such application is undetermined, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until the application for an order to arbitrate is determined and, if arbitration of such controversy is ordered, until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.

'If the issue which is the controversy subject to arbitration is severable, the stay may be with respect to that issue only.'

The order denying the petition to compel arbitration is an appealable order (Code Civ.Proc. § 1294, subd. (a)), and until determination upon appeal 'such application is undetermined' within the meaning of section 1281.4. (Code Civ.Proc. § 1049.) Thus, the question is whether the issues raised in the pending action are included in matters which the parties agreed to arbitrate. (5 Cal.Jur.2d § 14, p. 89.) Section 1281.4 contemplates arbitration of 'a controversy which is an issue involved in an action or proceeding pending before a court * * *'

No return has been made on behalf of the respondent court. The real party in interest, Sam Smith, contends that, aside from the question of jurisdiction, 'which as a fundamental proposition the Superior Court had jurisdiction to determine, all matters in issue relate to the dissolution of the partnership and distribution of its assets, and in determining distribution of assets, certain accounting procedures had to be followed and balances struck. In...