T & R Enterprises, Inc. v. Continental Grain Co.

• Decision Date: 17 March 1980
• Docket Number: No. 78-1295,78-1295
• Citation: 613 F.2d 1272
• Parties: T & R ENTERPRISES, INC., Plaintiff-Appellant, v. CONTINENTAL GRAIN COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1272

613 F.2d 1272

T & R ENTERPRISES, INC., Plaintiff-Appellant, v. CONTINENTAL GRAIN COMPANY, Defendant-Appellee.

No. 78-1295.

United States Court of Appeals, Fifth Circuit.

March 17, 1980.

Robert W. Hanson, Albertville, Ala., Allen Poppleton, Birmingham, Ala., for plaintiff-appellant.

Johnston, Barton, Proctor, Swedlaw & Naff, Alan W. Heldman, Sydney Lavender, Birmingham, Ala., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Alabama.

Before TUTTLE, FAY and THOMAS A. CLARK, Circuit Judges.

TUTTLE, Circuit Judge:

This appeal attacks a judgment confirming an arbitration award in favor of the defendant, Continental Grain Company (Continental) and against plaintiff-appellant, T & R Enterprises, Inc. (T & R). The appellant claims that the district court erred in (i) ordering the parties to proceed to arbitration in the face of an asserted dispute over the existence of an agreement to arbitrate, an issue which it claims should be submitted to a jury for resolution; (ii) entering judgment on the arbitration award under an agreement that did not explicitly provide for judicial enforcement; and (iii) confirming an award allegedly made in a different United States court district. We affirm.

T & R, engaged in poultry and poultry-related operations in Alabama, contracted with Continental, a Delaware corporation, to purchase feed corn in four deliveries, to take place over several months, at a price fixed at the date contracts were made. The orders were first placed by telephone, then reduced to writing by four sales confirmation slips sent from Continental to T & R. These slips were all signed by T & R's president and returned to Continental. Although arbitration was not mentioned in any of the telephone conversations between T & R and Continental, the face of each standard form sales confirmation slip bore the following legends: "subject to the Rules of Grain and Feed Dealers National Association;" and, in block capitals: "THE TERMS PRINTED ON THE BACK HEREOF ARE A PART OF THIS CONTRACT." The reverse side of each slip contained a provision for the settlement of any dispute arising under the contracts by arbitration "to the Exchange/Board and/or Association under whose Rules this contract has been drawn." The clauses further provided that "(t)he decision reached shall be final and binding upon all the parties thereto."

In January 1975, Continental began to deliver corn under the first of the four contracts. In February, after accepting the first shipments, T & R gave notice purporting to cancel all four contracts on the grounds that the corn delivered did not meet contract standards of quality and that Continental gave insufficient assurance of satisfactory performance in the future. When Continental refused to accept the cancellations, T & R filed suit in district court seeking to rescind the contracts. Continental defended by moving under the Federal Arbitration Act, 9 U.S.C. § 3 (1970), to stay the proceedings pending arbitration. The judge considered affidavits from both parties and a deposition taken by the plaintiff and granted the stay on August 4, 1975. Although Continental had not requested additional relief, the district court ordered the parties to proceed to arbitration, an order governed by § 4 of the Act. ¹ T & R moved for a stay of the order on grounds not involved in this appeal. ² It made no mention of the failure of the court to proceed under provisions of § 4, which required five days' notice to the other party. Neither did it claim the right to have a jury trial on the issue of the existence of the arbitration agreement. On September 29, 1975, the court again ordered the plaintiff to arbitration "without delay."

Thereafter, the parties proceeded with the arbitration including the filing of briefs by T & R which later refused to comply with a rule of the National Grain and Feed Association that the parties execute an arbitration contract. Thereupon, in April 1976, Continental went back into district court seeking "further relief." T & R then filed a "motion to expunge the record" for the first time objecting to the previous orders on the ground that the court did not follow the steps required by § 4 of the Federal Arbitration Act. The court acknowledged that the § 4 requirements had not been met and amended its August 4, 1975 order "to be merely a stay of the proceedings." However, the court considered Continental's pending request for further relief as a § 4 petition for an order directing arbitration. It also considered T & R's claim that it had missed the opportunity of requesting a jury trial by the court's failure to follow § 4. The court stated, however, that T & R had "not raised a genuine issue as to the making of the agreement for arbitration . . . " and thereupon again ordered the parties to arbitrate.

The arbitration hearing was held in Birmingham, Alabama, the district in which the proceedings were pending, and they resulted in an award adverse to T & R. Continental moved for judicial confirmation and enforcement of the arbitral decree under § 9 of the Federal Arbitration Act. On December 13, 1977, almost three years after this dispute first arose, the district court granted Continental's motion and reduced the award to judgment. This appeal followed.

T & R's first challenge to the judgment confirming the arbitration award is that the district court erred in "summarily" ordering T & R to arbitrate a § 4 order on the basis of a § 3 motion for a stay of proceedings pending arbitration. While the district court later recognized this error, T & R urges that the judge only added insult to injury by treating Continental's motion for additional relief as a § 4 motion and using it summarily to decide an issue that, under § 4, is a jury issue.

While it is, of course, preferable for the courts carefully to observe statutes and rules of procedure, we see no prejudice, harm or inconvenience to T & R resulting from the procedures that the court followed here. Because of the conduct of the complaining party in not timely objecting to the lack of statutory basis for the court's first or second order to arbitrate and because the court considered T & R's late claim to a jury trial, even though not timely made, we hesitate to elevate form over substance. ³

Section 4 of the Federal Arbitration Act provides in relevant part that "(i)f the making of the arbitration agreement . . . be in issue, the court shall proceed summarily to the trial thereof." Under § 4, the party allegedly in default of an agreement to arbitrate receives five days' notice, in writing, of the petition to compel arbitration, and has an opportunity to demand a jury trial on the issue of the making of the arbitration agreement. T & R claims that the district court's acknowledged failure to follow these procedures in entering the first orders compelling arbitration deprived it of the statutory and constitutional right to demand a jury trial to resolve the allegedly disputed existence of the arbitration agreement.

The court did acknowledge the error of its ways, stating that it was "in agreement with the plaintiff that the defendant's motion for a stay should not have been treated as a motion to compel arbitration under 9 U.S.C. § 4, in that the procedural requirements of that section were not complied with." Treating Continental's motion for further relief, then pending, as a § 4 petition, the court found that "the plaintiff has not raised a genuine issue as to the making of the agreement for arbitration or the failure to comply therewith, and that therefore the parties are due to proceed without further delay to arbitration in accordance with the terms of their agreement." The court thus gave the same consideration to T & R's request for a jury trial as it would have, had the procedures under § 4 been followed.

At first blush, it appears that in some cases a party positioned as was T & R here might complain that without the specific notice provided for under § 4, a hearing for another purpose might have been translated into a § 4 hearing without the injured party having an opportunity adequately to prepare for the issue. We do not face that problem here, for T & R did not urge this point either in any of its motions or in its brief or oral argument before this Court. It complains only of the fact that the failure of the trial court to follow the proceedings of § 4 prevented it from obtaining the jury trial to which it claimed it was entitled.

Continental places its support of the trial court's action on three grounds: (a) T & R itself elected to file the original action in the district court as a non-jury action; (b) T & R received repeated orders to arbitrate and elected not to demand a jury on the issue of "making of the arbitration agreement" until after the second such order and after commencing to comply with the order; (c) the "making of the arbitration agreement" was not genuinely at issue, as the four contracts containing the arbitration agreement, signed by T & R, were the very contracts declared upon in T & R's original complaint, identifying those instruments as evidencing the four transactions sued upon.

We need not decide whether T & R's failure to request a jury trial at the time it filed its complaint amounted to a waiver of a jury, once the provisions of the Arbitration Act were invoked by the other party. We consider that the conduct of T & R in not challenging the trial court's order as failing to give it an opportunity to elect a jury trial until Continental filed its third request for an arbitration order, and its failure even then to place its objection on the absence of due process notice for hearing purposes sufficiently validates the court's proceeding to determine whether there was a true issue as to the "making of the arbitration agreement," without more.

Here, when the court issued its initial order directing T & R to arbitrate the...