Tas-T-Nut Co. v. Continental Nut Co.

• Decision Date: 19 May 1954
• Docket Number: TAS-T-NUT
• Citation: Tas-T-Nut Co. v. Continental Nut Co., 125 Cal.App.2d 351, 270 P.2d 43 (Cal. App. 1954)
• Parties: CO. v. CONTINENTAL NUT CO. Div. 8264.
• Court: California Court of Appeals

Page 43

270 P.2d 43

125 Cal.App.2d 351

TAS-T-NUT CO. v.CONTINENTAL NUT CO.

Div. 8264.

District Court of Appeal, Third District, California.

May 19, 1954.

Hearing Denied July 14, 1954.

J. Oscar Goldstein, P. M. Barceloux & Burton J. Goldstein, Goldstein, Barceloux & Goldstein, Chico, for appellant.

Peters & Peters, Chico, for respondent.

VAN DYKE, Presiding Justice.

This is an action brought by plaintiff and respondent against defendant and appellant based on a breach of contract and seeking damages therefor.After trial the court awarded judgment in favor of plaintiff and defendant appeals.The subject contract was one for the sale and delivery of California black walnut kernels.Respondent was buyer and appellant was seller.The contract in memorandum form was dated January 19, 1949 and called for the sale of 30,000 pounds of nuts at 53cents a pound.Appellant delivered all but 10,505 pounds and the failure to deliver that remainder is the breach upon which respondent sued.

The contract contained the following arbitration clause: 'Any controversy arising from or concerning the transaction of which this contract is a part shall be settled by arbitration in the usual manner and judgment may be entered on the award in any court having jurisdiction'.Although deliveries made were somewhat delayed beyond the dates referred to in the contract, nevertheless those made were accepted, the last delivery being made June 8, 1949.On May 20th appellant had informed respondent that it would not be able to make full delivery under the contract.On July 28th respondent wrote to appellant, referring to the failure of appellant to make full delivery, and said: 'With reference to the differences between us arising out of our contract with you * * * it will be necessary to arbitrate both the matter of the freight due us and the failure on your part to fulfill the contract.* * * Please express to us by return Airmail your ideas as to the arbitration organization you prefer to handle this case.Kindly let us have these advices immediately by return Airmail.'Appellant did not answer this letter, but contacted the broker who had negotiated the contract, and the broker wrote on August 8, 1949, telling respondent that though appellant had been unable through circumstances which were beyond its control to make complete delivery, nevertheless appellant was proposing to deliver the additional quantity from the first available new crop at the same price as called for in the contract, or at such lower price at which the goods might then be selling.He stated that appellant was not refusing to arbitrate, but preferred not to do so as it felt the matter should be settled amicably without resorting either to arbitration or court action.The letter stated that if respondent insisted on arbitration it was probable appellant would agree, but it might refuse and if it did then respondent would have to force its demands by legal means.Respondent replied directly to appellant, referring to the broker's letter and requesting that appellant answer direct rather than through the broker.It rejected the offer to deliver out of the next year's crop and demanded and asked appellant to state by return mail whether it would arbitrate or not.August 22d appellant answered this letter, regretting the controversy and its inability to complete the order.The letter stated: 'Because of your insistence that the matter be arbitrated, we have concluded that Mr. Johnson [the broker] certainly could not have clearly explained the existing conditions to you.'The letter then contained a statement of reasons why the delivery had not been made, advanced a contention that amounted to a denial of any breach and then said, 'If, after you have considered the above, you insist that this matter must be arbitrated, it would be our suggestion that you notify us of the Arbitration Board you would prefer.'Respondent replied that it was not possible for the parties to reach an agreement and said, 'Since you have passed the buck back to us regarding the naming of an arbitration board we will skip our preference for a Baltimore group and suggest the New York Food Distributors' Association.* * * Please notify us immediately if we can be in agreement on this procedure so that we can simultaneously apply for arbitration of our dispute before that body.'No answer was made to this letter and on September 9th respondent again wrote to appellant, noting that apparently its letter had had no more success in bringing about an arbitration that the previous efforts and it again asked for agreement on arbitration procedure and a definite statement whether appellant would arbitrate or not.The letter closed with a statement that unless it had some word by the 15th of September it would treat it as a refusal to arbitrate and submit the matter to respondent's attorneys for 'whatever legal action' the attorneys should recommend.On September 13th appellant replied, stating that it felt that neither arbitration nor legal action would answer the problem, and again proposing to fill the order from the next crop.No answer was made to the specific demand of respondent that appellant either agree to arbitrate or announce its refusal.Respondent committed the matter to the care of its counsel in Baltimore, who on September 26th wrote to appellant, stating that unless appellant was willing to settle the claim or to arbitrate it without further delay they would pass the matter on to counsel in San Francisco with instructions to enter suit at once.On October 15th appellant replied to the Baltimore attorneys, saying they were not in accord with the expressions contained therein concerning their liability, and were doubtful of the validity of the arbitration clause, but were willing to place the matter before an arbitration board in San Francisco if that was satisfactory to the respondent.No reply was made by the attorneys.On December 8th Chico counsel for respondent wrote to appellant, stating the amount of the demand and requesting payment within ten days.They said if their demand was not met they would file suit.On December 9th appellant replied to respondent's Chico attorneys, stating that under the terms of the contract the matter would have to be arbitrated; that they had already stated they were willing to place it before an arbitration board in San Francisco and had had no response thereto.Appellant said that it considered arbitration must necessarily first be exercised before litigation would be in order.There appears to have been no further communication between the parties or their counsel and this action was begun February 15, 1950.All of the communications between the parties were by mail and the foregoing constitutes a condensation of the correspondence placed in evidence.

The complaint contained two counts, the first setting up the contract in substance and containing an allegation of breach with a demand for damages.The second count repeated the allegations of the first count by reference and additionally pleaded that although the contract called for arbitration the appellant's rights to arbitration had been waived.Appellant demurred to the complaint, urging in its points and authorities in support of the demurrer that arbitration was a condition precedent to the right to commence the suit.The demurrer was overruled and appellant answered, again pleading the arbitration clause and denying that its right to arbitration had been waived or that it had ever refused to arbitrate.It asserted its willingness to arbitrate and alleged the action was premature and should be abated until arbitration took place.The answer was filed on June 21, 1950 and on November 13th following appellant filed a petition for an order compelling arbitration and for a stay of proceedings based upon its claim that it was entitled to arbitration and that the action should be abated until arbitration was had.The court denied the petition and proceeded in due course to try the issues presented by the pleadings.It adopted findings to the effect that appellant had waived its rights to arbitration.Whether or not this finding of the trial court is supported by the record is the issue presented by the first contention of appellant on this appeal.

Notwithstanding that it has often been held the right to arbitrate can be waived, Squire's Dept. Store, Inc., v. Dudum, 115 Cal.App.2d 320, 329, 252 P.2d 418;Trubowitch v. Riverbank Canning Co., 30 Cal.2d 335, 339, 182 P.2d 182;Bass v. Farmers Mut. P. Fire Ins. Co., 21 Cal.App.2d 21, 68 P.2d 302;Pneucrete Corp. v....